1. Over the Counter Options User Guide
  2. Overview of Over the Counter Options

1 Overview of Over the Counter Options

The Options module in Oracle Banking Treasury Management supports the complete life-cycle processing of the following over-the-counter derivative instruments:

  • Interest Rate Options – Caps, Floors, Collars and Corridors
  • Swaptions
  • Currency Options – Plain Vanilla and Exotics

You can define products for buying or selling each of the above instruments, enter details of specific transactions, terminate or exercise option contracts and generate a comprehensive range of reports about your transactions in OT. You can enter into deals for hedging your existing exposures against interest rate or exchange rate fluctuations (hedge deals) or for speculation (trade deals).

Based on specifications, Oracle Banking Treasury Management can:

  • Post accounting entries for various events in the life of an OT contract
  • Generate messages for various events in the life of an OT contract
  • Automatically exercise such contracts which are so marked by you
  • Revalue outstanding contracts periodically
  • Track your exposure to counterparties
  • Generate, or allow you to generate, foreign exchange or interest rate swap deals on the exercise of physically settled currency options and swaptions respectively.

Subject to relevance to a specific instrument, Oracle Banking Treasury Management supports all the standard option expiration styles:

  • European – where the option is exercised only on a pre-specified future date
  • American – where the option is exercised on any date before and including a pre-specified future date
  • Bermudan – where an option is exercised on any one of a set of pre-specified dates