Aaron Nauman

Hedging for SMEs?

I'm not sure.

We'll find out in the future.

But basically, I have over 20 years of experience providing hedging solutions to a lot of companies, small, big, private individuals, high net worth.

So I think we acquired some experience and that's what maybe I'm paid for.

In a very simple manner, when you have an importer, for example, that is buying some type of an inventory.

For example, an importer from the US that is buying, for example, inventory, which is wine, okay, from Euro.

So he's a dollar base.

He's selling his wines in dollars, but he's paying for his wines in Euro.

So the exposure between the Euro and the dollar is affecting him.

so if he's buying it in euro for example and you know he is actually purchasing it the euro is going you know uh increasing versus the dollar then he can lose a lot of money basically by paying more so what we're doing here is we're providing him with a hedge that he can fix his euro dollar rate at the uh let's say the inception of his uh of his order and that's that that way he knows how much he paid in dollars okay for something that he will be receiving two months time

And then he knows what will be the price for his end clients in the US that will pay for these wines.

And then the actual profit will be the amount he paid for the specific wine.

And basically the price that he sold the wine at, at dollars as well.

So it's dollar versus dollar and not dollar versus euro.

Yeah, you know, lately it's actually, it's very volatile.

So we can say that over the past even two weeks, the euro increased versus the dollar by 8%.

So for example, a million dollar inventory, you could have lost $80,000 or 80,000 euros just by waiting, you know, for two weeks to pay for the actual wines.

So that's a lot of money for how much you would have sold those wines, you know, in the U.S.,

But I'm not sure that his profit margin is 8% or 10%.