An interest rate option allows you to receive a specific interest rate on a specific type of financial instrument over a specified time period.
Use the Interest Rate Options window to enter your interest rate option deals.
In the Company and Counterparty fields of the Interest Rate Options window, select a company and counterparty for the option.
If you are acting as a broker for a client, in the Dealer field select the client you are acting as a dealer for.
In the Portfolio field, select a portfolio for the option.
If you want to apply a limit to this option, in the Limit field select a limit.
In the [ ] Descriptive Flexfield, complete the descriptive flexfield information as required. For more information on descriptive flexfields, see: Defining Descriptive Flexfields.
In the Deal Subtype and Product Type fields of the Main Details tab region, select a deal subtype and product type for the option.
In the Currency field, select a currency for the option.
In the Option Amount field, enter an amount for the option.
In the Expiration date field, enter an expiration date for the option. If you are entering an American style option, in the Start Date field, you must also enter a start date for the option. The Option Style field is automatically populated, with European or American, based on the dates you enter.
In the Physical Start Date field, enter a date on which you want interest to begin to accrue. For European options, the physical start date is the same as the expiration date.
Note: You can change the physical start date when you exercise the option. If you change the physical start date, the settlement will be discounted to the date you actually received the settlement.
In the Maturity Date field, enter a maturity date for the option.
In the Strike Rate field, enter the rate at which you can buy or sell the option.
In the Day Count Basis field, choose a day count basis for the deal. The day count basis determines the number of days per year used to calculate interest on the deal. The possible day count bases are: actual/actual, actual/360, actual/365, 30/360, 30E/360, 30E+/360. For more information on how each day count basis is calculated, see: Treasury Terms.
In the Amount field of the Premium Details region, enter the amount of the option premium. Then, in the Company Account field, select the account to which you want to direct the premium.
Complete the fields in the Premium Details and Additional Details tab regions as needed.
Save your work.
Use the Exercise Details window to exercise your interest rate options.
In the Interest Rate Options window, query the interest rate option that you want to exercise.
Choose the Exercise button. The Exercise Details window appears.
In the Settlement Rate field, enter the rate at which you exercise the option.
Enter the date on which you exercise the option.
Save your work. You return to the Interest Rate Options window.
If you want to view the exercise details for the interest rate option, in the Interest Rate Options window query the record and select the Exercise region of the window.
Use the Premium/Settlement Details window to view a list of all of your interest rate options.
In the Interest Rate Options window, choose the Summary button. The Premium/Settlement Details window appears.
Use the View Interest Rate Options window to view the details of an interest rate option.
In the View Interest Rate Options window, query the option that you want to view.
If you want to view a summary of your interest rate options, choose the Summary button. The View Premium/Settlement Details window appears.