Forms and Types of Forex Options

In forex trading as in stocks trading, there are two basic forms of options: the call and the put option. A call option gives the holder (buyer) the right to purchase a certain amount of the underlying currency at a specified price (the strike price) and date. A put option gives the holder the right to sell a certain amount of the underlying currency at the strike price. Forex options are divided into two major categories, both available on the Finotec Trading Platform: vanilla and exotic options. The major difference between those categories lies in the variables that they integrate. Each category contains several Options Types:. Vanilla options: these are the simplest types of options. The origin of the name is not clear. They refer to standard CALL and PUT forex options contracts. Please note that "put" and "call" forex options contracts are note the opposite of the same transaction but two separate transactions. This means that for every forex call option buyer there is a call seller and for every forex put option buyer there is a put seller. Under our platform's Vanilla options, you will also find both straddle and strangle options strategies. These last options types are actually defined as options strategies. Exotic options: Unlike plain vanilla options with single strike prices and standard expiration dates, exotic options are based on more complex conditional time and price scenarios. Exotic options include different types if options including "barrier" options (knock-in, knock-out, reverse knock-in, reverse knock out) and "binary" options (one-touch, no-touch, double one touch, double no touch). In general, options can be either American-style or European-style. American-style options may be exercised at any point until the expiration date. European-style options may only be exercised at the time of the expiration date. Options trading with Finotec is facilitated by a complete set of tools designed to help traders make considered trading decisions.