You could buy a call and sell a put basically collar yourself for around even

What Windy said. Buy currency options to cover the pay cut if the pound goes up. That is what farmers around here do with their crops.

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They constantly try to escape from the darkness outside and within
Dreaming of systems so perfect that no one will need to be good T.S. Eliot

A forward, an option (or collar) or you could look at buying a GBP ETF, which may be simpler from a logistics perspective. Is it a fixed term contract or a job you'll have indefinitely? If the latter, would you plan to hedge one year at a time?

I assume compliance isn't an issue. I'm not allowed to hedge my salary.

I have read of such things but how exactly would one do it?

Secondly, it currently trades at 1.30, if it went to 1.5, I know roughly what that is worth to me, call it 1000 pounds

Let's say my salary was 10k, what do I do? The whole salary, the difference? What would it cost me?

(reading adaptive markets by Lo)

Looking at the options market, things seem biased toward hedging dollar appreciation. Pretty cheap right now to hedge your downside in GBP. What Windy said is a cheap hedge. I generally discourage people from gambling with their livelihood but the USD is honestly experiencing a perfect storm to push it higher and it's hard to see when it will stop. The Federal deficit acts to siphon dollars out of the global system and the fact that the U.S. is now an occasional oil exporter (instead of a massive importer) means that oil price increases are now net positives for the USD.

If you want to hedge GBP1000 salary then you would buy a GBP call with a notional amount of GBP1000, with say a strike of 1.35. This gives you the option to buy GBP1000 at the maturity date at 1.35. You can cash settle the value of the option, so you don't actually need to buy GBP at 1.35 and sell it back to the market at 1.50. This would give you a hedge for your GBP1000 salary.

A collar means you buy a GBP call at say 1.35 and sell a GBP put at say 1.25. You would also do this in a notional amount of GBP1000. The collar is normally structured to be zero cost, so unlike buying a GBP call on it's own, the collar is free. Downside of a collar is you cap your gains at 1.25 if GBP falls. Upside is you pay no up front premium as you would if you just buy the call.

Premium on a call will depend on your strike. The lower the strike the more expensive. You could set the strike for a certain premium- say 1.5% of notional.

The problem with all this is that for a retail investor you tend to pay a wide spread. Normal options in the wholesale market are on notionals of USD10m and up. So if you get a price on an option for say GBP200k, it may be a crappy price.

Hence an etf could be a better way to go, to at least mitigate some of your exposure.

What makes you think that it is likely to rise to $1.50?

But he's got to pay for the ETF in full upfront meaning that cash isn't working for him. Let's say dollar strengthens so now he's getting fucked coming and going, principal on the ETF and opportunity on the pay in full.

Doing a future would be better way to do the same concept since just mark to market plus initial margin which is nothing.

The more I think about it doing the collar in the futures market would be the best best. Decentish liquidity for retail and smaller notionals

What if there's a general election, Labour wins on a platform of a 2nd referendum, and the UK votes to stay in the EU? Or what if a new UK PM finds some compromise from the EU and then a customs union deal is approved in the UK parliament?

Not saying these outcomes are probable, but they are possible. A no-deal Brexit is also possible, but no one seems to want that outcome.

You'd have to do the whole salary to offset the whole amount of risk.

Boilerplate not providing advice there are three options after my revised thoughts.

Buy a future for whenever (or as close as possible) the employment contract expires. This is the simplest way to do it. Almost idiot proof.

Do a collar in the futures market. Buy a 135 call sell a 125 put for around even. You have some float but know your range.

Buy a call in the futures market. This hedges you and is almost idiot proof but also most likely to piss money away.

Personally I'd do a collar. You, I'd consider the future or the collar.

Also you have to investigate tax implications and remeber retail gets fucked on commissions

Yes, agree that a simple forward contract could be the cheapest way if he's willing to lock in at the current forward rate (1.2960 for 12m mid-market).

Can retail trade forwards? ISDA, funding, guarantees all that garbage. Future is cleaner even if the price is inverse

Not sure tbh. I would think that most places that offer retail FX on a margin account basis you could do a forward, but I have never looked into it personally.

I can purchase the value of my salary at today's FX rate for 12 months with 10% down. Balance to be paid within 365 days

Is that what you mean?

I do this regularly for sterling euro

I will be paid in a pegged dollar currency, so my intention is to move that in to a dollar account in UK / jersey

The question is how to get it back to sterling. Mind you with a Corbyn government I might just leave it where it is

I can get a spot or forward contract but nothing beyond 12 months

I'm interested in more than 12 months.

I hope you didn't hedge yet.... hear that whooshing sound.... that is cable going into the toilet

Nope

Though it does look like the longer this goes on before I even get s job I will have had a pay rise

As an aside options and collars are no starters as commissions to high and no one offers them in UK as they may missold them.........

Admittedly, this is not my thing. Are ETFs for currency similar to oil/gas ones, which are meant to track the forwards? If so, couldn’t he get hosed if there’s any contango in the curve?