Annualized forward premium or discount between two currencies.
Please do not make financial decisions based on these results.
What is the Forward Premium Calculator?
Annualized forward premium or discount between two currencies. To use the Forward Premium Calculator, enter spot rate, forward rate, months to maturity; it returns annualized forward premium, premium for period, and shows them instantly as you type.
Where the Forward Premium Calculator fits
Annualized forward premium or discount between two currencies. The main figure it returns is the Annualized forward premium, worked out from the values you enter.
It belongs with the other options & derivatives tools. If you are comparing options or checking a result from another angle, try the Forward Rate Calculator, Black Scholes Calculator or the Call Option Calculator.
How to use the Forward Premium Calculator
- Fill in the fields. You will need Spot rate, Forward rate, Months to maturity. Use real figures from your own records where you can. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Annualized forward premium, and the cards below show Premium for period. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Forward Premium Calculator using the default values shown in the calculator above:
Inputs
| Spot rate | 1.085 |
|---|---|
| Forward rate | 1.092 |
| Months to maturity | 6 |
Results
| Annualized forward premium | 1.29% |
|---|---|
| Premium for period | 0.65% |
With these inputs the calculator returns Annualized forward premium: 1.29%. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Spot rate from 1.085 to 1.3 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Annualized forward premium | 1.29% | -32% | -2580% |
| Premium for period | 0.65% | -16% | -2580% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the Forward Premium Calculator reports Annualized forward premium and premium for period. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. The result is only as accurate as the numbers you enter and the formula shown above. It is for information, not financial, tax or legal advice.
Frequently asked questions
What does a forward premium imply?
The currency is expected to be worth more, in line with interest-rate differences.
Can I lose more than I invest?
Buying options risks only the premium, but selling uncovered options or trading futures can lose far more than the margin posted.
What do the Greeks mean?
Delta is price sensitivity to the stock, gamma is the change in delta, and vega is sensitivity to volatility.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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