PURPOSE
To show illustration of option long journal.
OVERVIEW
TRANSACTION DETAILS
| Accounting Base Ccy |
| Trade ID |
| Trade Date |
| Expiry Date |
| Value Date |
| Transaction |
| Option Type |
| Style |
| On Currency |
| Principal |
| Against Currency |
| Strike Price |
| Premium Paid |
| Volatility |
| USD |
| OPT1001 |
| 25-Mar-03 |
3-Apr-03 |
3-Apr-06 |
Buy |
Put |
European |
IDR |
1,000,000,000.00 |
USD |
9,175.000000 |
523.23 |
5.000000% |
SUMMARY OF JOURNALS
| ID | Date | Description |
|---|---|---|
| J1 | 25-Mar-03 | On Inception of the Options |
| J2 | 31-Mar-03 | Month end revaluation |
| J3 | 1-Apr-03 | Reversal of Month end revaluation |
| J4 | 3-Apr-03 | On Net Settlement of Options |
| J5 | 3-Apr-03 | On Exercise of the options (Alternative to J4) |
| J6 | 3-Apr-03 | On lapse (Alternative to J4) |
J1 On Inception of the Options
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| OPT1001 | 25-Mar-03 | P | FX Option Premium Expense | USD | 523.23 | 1.000000 | USD | 523.23 | J1a |
| OPT1001 | 25-Mar-03 | B | Cash at Bank | USD | -523.23 | 1.000000 | USD | -523.23 | J1b |
J2 Month end revaluation
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| OPT1001 | 31-Mar-03 | B | Revaluation - Options | USD | 712.78 | 1.000000 | USD | 712.78 | J2a |
| OPT1001 | 31-Mar-03 | P | Unrealised Gains - Options | USD | -712.78 | 1.000000 | USD | -712.78 | J2b |
Note J2a: Assume the MTM on 31-Mar is USD 712.78
J3 Reversal of Month end revaluation
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| OPT1001 | 1-Apr-03 | B | Revaluation - Options | USD | -712.78 | 1.000000 | USD | -712.78 | J3a |
| OPT1001 | 1-Apr-03 | P | Unrealised Gains - Options | USD | 712.78 | 1.000000 | USD | 712.78 | J3b |
J4 On Net Settlement of Options
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| OPT1001 | 3-Apr-03 | B | Cash at Bank | USD | 814.23 | 1.000000 | USD | 814.23 | J4a |
| OPT1001 | 3-Apr-03 | P | Realised Gains - Options | USD | -814.23 | 1.000000 | USD | -814.23 | J4b |
Note J4a: Assume the net settled amount is USD 814.23. The system books the following journal on settlement.
J5 On Exercise of the options (Alternative to J4)
Note J5: On exercise of the Options, the system books a FX Outright trade at the contract rate equal to the Options strike price. Thereafter, there is no further journals for the Options contract. The FX trade is dealt in accordance with all other FX Outright trades. See FX Outright trade journals.
J6 On lapse (Alternative to J4)
Note J6: On lapse of the Options, no journals will be generated for the Options.
EXCHANGE RATES
FREQUENTLY ASKED QUESTIONS
RELATED INFORMATION
CHANGE HISTORY
| Date | By | Changes |
|---|---|---|
| 22-Feb-2008 | CS | Creation. |
| 14-Jun-2016 | RJ | Reformatted. |
| 24-Apr-2020 | LT | Re-formatting. |
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