Foreign currency options in the market over-the-counter (OTC) major banks, financial institutions and large international corporations to hedge against foreign exchange risk as the financial vehicle started. Foreign exchange spot market, like the foreign exchange market an alternative "interbank" market is considered. However, through the Internet real-time financial data and forex option trading software available to most investors with a plethora of, today's forex option market now individuals and corporations who are speculating and / covers an increasingly large number of or via the telephone or online forex trading platform foreign currency risk hedging.
Foreign exchange options trading for many traders and investors has emerged as an alternative investment vehicle. As an investment tool, forex option trading and more flexibility when determining the appropriate foreign currency trading and hedging strategies to implement both large and small investors with offers.
Most forex options trading is conducted via telephone as there are only a few forex brokers offering online forex option trading platform.
Define foreign currency options - a financial exchange a foreign currency option foreign currency option contract giving the buyer the right, but to purchase or on or before a specific price (strike price) at a specific spot foreign exchange contracts (underlying) selling No obligation for a specific date (expiration date). Amount of foreign currency option buyer option contract foreign currency option seller exchange for rights to foreign currency call option gives the "premium."
Foreign exchange options buyer - the buyer, or a foreign currency option holder, or the expiration of options contracts to sell foreign currency pre-choice, or he or she choose to hold foreign currency option contract expiration and may practice their or the right place to take a position in the underlying foreign currency. Foreign currency option exercises and take inherent in foreign exchange spot market since the act of state "work" or being "assigned" as a stop position is known.
Only initial financial obligation to sell foreign exchange options buyer's premium up front when the foreign currency option is initially purchased to pay. Once the premium is paid, foreign currency exchange option holder option when no other financial obligation (no margin is required) then offset or expires.
Expiration date, call the buyer the option strike price on that exchange for the underlying foreign currency spot position can be used to buy the rights holder and put him on the right to sell the underlying foreign currency spot position may use foreign currency options strike price. Most foreign currency options are not used by the buyer, but instead are offset in the market before the end.
Foreign currency options expires worthless if, while foreign currency option expires at the strike price is "out for money." In simple terms, a foreign currency option is "out of-the-money" if the underlying foreign currency spot price of a foreign currency call option strike price is less than, or the underlying foreign currency spot price is a put option strike over the price. Once a foreign currency option has expired worthless, the foreign currency option contract expires and neither the seller nor the buyer for the other party has any further obligation.
Foreign currency option seller - Foreign currency option seller the "author" or a foreign currency option contract "grantor" may be called. Unlike a foreign currency option seller the underlying foreign exchange spot contract replaces the buyer is obliged to exercise their right. In return for premiums paid by the buyer, the seller at a later point in time spot foreign exchange market is the risk of making potentially adverse conditions.
Initially, foreign currency option seller foreign currency option buyer (the buyer to the seller immediately forex trading account funds will be transferred) paid by the premium collected. Foreign exchange option seller for his or her initial margin requirement of funds should be covered. If the market move towards a friendly seller, the seller of your initial margin requirement other than foreign currency options will not post any more funds. However, if the market for foreign currency options seller in a hostile move towards the seller to maintain its foreign exchange trading, foreign exchange margin trading account surplus to balance the account after the additional funds could be .
Like buyers, foreign currency option seller or so back (purchase) options market, foreign exchange options expiration, or the seller before the contract to offset the foreign currency option contract until expiration can choose to hold the like. If the foreign currency options seller holds the contract until the end, the two scenarios would be: (1) the seller would take the opposite underlying foreign currency spot position if the buyer (2) the seller will or simply exercise the option foreign exchange options worthless (keeping the entire premium ) if the strike price is out over money.
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Business Etiquette
12 years ago
