Fx Options
Master Complex Financial Derivative Contracts
Through Interactive AI Learning
FX Options (Foreign Exchange Options) are financial derivatives that grant the holder the right, but not the obligation, to exchange a specified amount of one currency for another at a predetermined exchange rate (strike price) on or before a specific date. They are widely used for hedging currency risks or speculating on currency movements. There are two main types of FX options: call options, which give the right to buy a currency, and put options, which give the right to sell a currency. FX options can be traded over-the-counter (OTC) or on exchanges, and their pricing depends on factors like the spot exchange rate, volatility, time to maturity, and interest rate differentials between the currencies.