A quanto future or quanto option is a type of derivative in which the underlying traded product references a foreign underlying, but the instrument itself is settled in another currency at a fixed rate. These products are attractive to market participants who wish to gain exposure to a foreign commodity but without the corresponding exchange rate influence.

Benefits          

• Easy access to the international commodity market with a contract traded in local currency (ZAR)
• Quanto's are attractive since they shield the participant from exchange rate fluctuations.
• Effectively manage price risk with a view on the international market
• Identify short term and long term price and volatility patterns
• Hedge or gain exposure based on expectations of directional price, spread movement or volatility of the foreign commodity

Who should use this product?

• Hedgers seeking to protect themselves against adverse price movements exposed to the international commodities
• Speculators hoping to make a profit on short-term price movements in the futures contract price

How to use this product?

• Register as a client with Vunani Securities
• Deposit the required initial margin (good faith deposit) to be able to take out a sell or buy futures position
• Sell a futures contract to benefit from a downside movement. Buy a futures contract to benefit from a upside movement

Introduction to trading Foreign Referenced Commodities
Contract Specifications for futures and Options
Quanto Futures - the case for investing in Commodities