When investing abroad, one must consider foreign market risks, stock price risks, and importantly, exchange rate risk that can turn profits into losses if not hedged beforehand. For example, exchanging 100,000 USD at 33.10 baht per dollar to invest in TESLA shares, and after three months the portfolio gains 6.5%, but the exchange rate then is 31.00 baht per dollar. The portfolio suffers a loss of 106,500 x 31.00 - 100,000 x 33.10 = -8,500 baht (excluding fees).
Therefore, managing exchange rate risk is crucial for foreign investments. Nowadays, there are more hedging options beyond USD Futures. TFEX has added USD Options, available for trading since 15 Dec 2025 GMT+7, featuring key advantages as follows.
1. Requires low capital investment.
2. Used to manage currency risk.
3. Confident and transparent trading with legal protection.
USD Options are instruments granting the buyer (Long) the right, but not the obligation, to buy (Call) or sell (Put) USD/THB exchange rates at a specified price and time. The buyer pays a premium to the seller (Short) for this right. Contract symbols available on TFEX are shown below.
For example, opening a Long position on USDH26C31.25 means expecting the baht to weaken beyond 31.25 baht per dollar by the end of March 2026. Conversely, expecting the baht to strengthen beyond 31.25 baht per dollar, one can open a Long USDH26P31.25 position to hedge against baht appreciation risk.
To illustrate more clearly, here is an example.
In December 2025, Mr. Pat wants to exchange 300,000 USD for investment in the U.S. until March 2026 and seeks to hedge against baht depreciation by buying Call Options with a strike price of 31.25 baht per dollar, 300 contracts at 0.30 baht per dollar (USDTHB Spot = 31.17 baht per dollar).
- Total premium paid = 0.30 x 1,000 x 300 = 90,000 baht.
- On expiry date (30 Mar 2026), USDTHB rises to 33.21 baht per dollar.
- Mr. Pat needs to pay extra baht (33.21 - 31.17) x 300,000 = -612,000 baht.
- The Call Options yield profit of (33.21 - 31.17 - 0.30) x 1,000 x 300 = +522,000 baht.
This shows Mr. Pat hedged 85% (522,000/612,000) of the baht depreciation risk using just 0.96% (90,000/(31.17 x 300,000)) of the initial capital for hedging (excluding fees).
Summary: In investing, where returns and risks go hand in hand, exchange rate volatility can instantly become the deciding factor for foreign portfolios. The above example clearly shows that while foreign assets may yield attractive returns, without proper currency risk management, profits can erode or unexpectedly turn into losses.
USD Options on TFEX fill a gap in risk management tools for Thai investors, offering low initial capital, flexible directional hedging, and up to six months of planning horizon. Crucially, buyers have the “right but not the obligation,” enabling clear risk cost control from the outset.
Ultimately, sustainable investing is not just about maximizing returns but preserving gains amid uncertainty. For investors with foreign currency transactions or overseas portfolios, USD Options are not just a new choice but a strategic tool providing comprehensive, professional Thai baht exchange rate risk management in one solution.