The U.S. Dollar is represented by the exchange rate between the United States Dollar and the Brazilian Real and may vary according to the flow of U.S. Dollars within Brazil. This variation occurs in several ways, such as foreign investments in the country, the entry and exit of U.S. Dollars through the financial flow generated by imports and exports, economic conditions, international interest rates, and through the Central Bank of Brazil’s involvement in trading U.S. Dollars in the domestic market, among other ways, thus arising the need for mechanisms to limit the risks of price fluctuation.
The Mini Options on U.S. Dollar Spot are derivative instruments with a smaller round-lot than full, more affordable options and were created to mitigate market price risks of institutions with assets/liabilities benchmarked to the U.S. Dollar. This not only provides a hedging mechanism to protect the market against possible losses, but also serves to create speculative price strategies and increase the exposure and the return potential of an investor.