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| FOREIGN EXCHANGE | |||||
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| SERVICES SINCE 2001 | |||||
 Overview
of Currency Options Options Glossary Option Price Dynamics Options Pricing Option Types |
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Currency Options Glossary Basic Glossary Call: An option which gives the option buyer the right to purchase (go long) a particular currency at a specific rate. If the buyer exercises the call option, he will acquire a long currency position and someone who has sold an option will be assigned a short currency position at the same time.Put: An option which gives the option buyer the right to sell (go short) a currency and someone who has sold an option will be assigned a long currency position at the same time. Underlying: The currency which the option buyer has the right to purchase (in the case of a call) or sell (in the case of a put). Strike Price: The rate at which the buyer of a call has the right to purchase a currency and at which the buyer of a put has the right to sell a currency, also referred to as the exercise price. The strike price is determined at the time the option is purchased by the client. Premium: The "price" of the option, the money the option buyer pays and the option seller receives for the rights conveyed by the option. The premium represents the amount the option buyer can lose. Exercise: The action taken by the buyer (holder) of an option who wishes to acquire a position in the underlying currency at the option strike price. Expiration Date: The last day on which an option can be exercised. Options expire on a specific date that is determined by the customer at the time the option is transacted with the bank |
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