Forex Options Trading
FX Options are also known as Forex Options or Currency Options. They are derivative financial instruments, in particular, Forex derivatives.
Forex options trading is a strategy for use in the foreign exchange (FX) marketplace which allows traders to trade without taking actual delivery of the asset. Forex options trade over-the-counter (OTC), and traders can choose prices and expiration dates which suit their hedging or profit strategy needs.
Traders like to use forex options trading for several reasons. They have a limit to their downside risk and may lose only the premium they paid to buy the options, but they have unlimited upside potential. Some traders will use FX options trading to hedge open positions they may hold in the forex cash market. As opposed to a futures market, the cash market, also called the physical and spot market, has the immediate settlement of transactions involving commodities and securities. Traders also like forex options trading because it gives them a chance to trade and profit on the prediction of the market's direction based on economic, political, or other news. Forex Options Trading is a strategy that gives currency traders the ability to realize some of the payoffs and excitement of trading without having to go through the process of buying a currency pair.
Reviewed by FxTactic
on
February 07, 2019
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