Hedging of Sales by Zerocost Collar and its （套期保值Zerocost衣领和它的销售）.pdfVIP

Hedging of Sales by Zero-cost Collar and its Financial Impact Bartoňová Marie Abstract The zero-cost option structures appeared in 90´s and became popular tool of hedging. They come of combination of standard and also exotic option. The paper deals with the most fa- mous of them - zero-cost collar strategy. It is researched from sales hedging point of view, so the paper proposes an application of the strategy in hedging against an exchange rate drop of the currency at a future date. The goal of paper is certification of theoretical findings in particular option contracts for sales hedging and a financial impact analysis of reached results. The paper shortly devotes also to find out offer of products in zero-cost option area and their availability and expediency for Small and Medium-sized enterprises. Key words: zero-cost option strategies, put option, call option, exchange rate, strike price, hedging, 1. INTRODUCTION A fluctuation of currency exchange rate means constant risk for the Czech companies. The appreciation of the Czech currency and mainly considerable volatility of exchange rate can lead to significant losses of enterprise value. Exchange rate course in last months has signified the negative impact more on importers but it is not definite for exporters at current change of trend. Both entities will try to hedge against the currency risk. One of the hedging possibilities is using of options, although the forwards are always the most used. This possibility was not often used considering relatively high price of option, by small and middle-sized enterprises then only rarely. However, some companies use options. Zero-cost options account for the largest share of options. An offer of option with zero initial costs, or commonly used zero-cost option, looks attractive for enterprises. Prima facie meets the forwards which suit them, it means a way of hedging without initial costs, but also what they valuate on option, it means