An Option-Dated Forward Contract lets your company eliminate downside risk by setting a price today for a foreign exchange transaction at a future date. Unlike a regular forward contract, which requires you to complete the transaction on the day it expires, the Option-Dated Forward lets you deal over a period of up to 30 days before the expiry date. You can choose when to buy U.S. dollars during this option period, as long as you take delivery of the entire contracted amount by the end of the 30 days. This gives you all the advantages of regular forward contracts plus added flexibility. And consolidating a number of small forward requirements into one larger contract can be more convenient and cost effective.

For example, suppose that on January 2, your company believes it will have to buy the following U.S. dollar amounts in the month of February:

If you're sure of the day you will require each amount, you can book separate forward contracts for each date and amount. But if the timing is uncertain, consolidating your requirements into one $1,000,000 Option-Dated Forward contract lets you fix a price on January 2 and then take delivery of the U.S. dollars as you need them, as often as you need them, at any time between February 1 and February 28. The minimum amount for withdrawal is $25,000 U.S. at a time, and you must leave at least $25,000 U.S. outstanding on the contract.

For more on how TD can work with you to manage your cash, foreign exchange and interest rate risk, review About TD Financial Management Services. Or, if you have a specific question, e-mail us and a TD Treasury representative will follow-up directly with you.