Forward contract -optional term
When an importer is unsure of the exact delivery date, they may encounter a situation where the contract rate is adjusted against them if they enter into a fixed term contract and are required to deliver significantly earlier than the expiry date. This uncertainty can be avoided by entering into a contract with a firm rate that applies for delivery within a specified period, typically 15 to 30 days. In this case, deliveries within the optional period would be executed at the contract rate, while earlier deliveries would require an adjustment to the rate, similar to pre-deliveries in fixed term contracts.
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