Option trading forex

Forex Option & Currency Trading Options.

DEFINITION of 'Forex Option & Currency Trading Options'

A security that allows currency traders to realize gains without having to purchase the underlying currency pair. By incorporating leverage, forex options magnify returns and provide a set downside risk. Alternatively, currency trading options can be held alongside the underlying forex pair to lock in profits or minimize risk. In this case, limiting the upside potential is usually necessary for capping the downside as well.

BREAKING DOWN 'Forex Option & Currency Trading Options'

Not all retail forex brokers provide the opportunity for option trading. Retail forex traders should research prospective brokers because for traders who intend to trade forex options online, having a broker that allows you to trade options alongside traditional positions is valuable; however, traders can also open a separate account and buy options through a different broker.

FX Options Trading at Saxo.

Our proposition to the FX options trader is truly unique given the depth of our product offering, the quality of analytics we provide, and the level of service we make available to our clients.

FX options enable you to express a view on the underlying spot price moving higher, lower or sideways, or to take a view on future volatility. FX options also provide more alternatives in relation to controlling risk, and can be used as a viable alternative to using a stop loss order.

Enhanced Disclosure.

In order to demonstrate our commitment to fair outcome, execution quality, and transparency within the financial industry Saxo has fully disclosed its dealing practices and client performance.

FX Global Code.

Saxo is one of the first global institutions to sign and act in accordance with the new FX Global Code of Conduct, a commitment to stricter customer protection and transparency in the Forex market.

Flexibility.

Get full electronic access to trade vanilla and binary touch options with maturities from 1 day to 12 months, providing you with maximum flexibility to implement your trading strategies and market views.

Quality analytics.

Access a professional set of reports with live updates that provide a detailed analysis of FX spot and option positions across multiple currency pairs.

Responsible leverage.

Benefit from our tiered margin methodology as a mechanism to manage political and economic events that may lead to the market becoming volatile and changing rapidly.

Experience and expertise.

Benefit from Saxo’s extensive experience as a liquidity provider and access a wide range of educational resources available through our webinars and trading academy.

Trading Platforms.

Available on Saxo’s next generation trading platforms SaxoTrader and SaxoTraderGO, with Global Sales Trading or via API across 3rd party platforms. Platforms.

Education and analysis.

Follow Saxo Strategists on Tradingfloor and access training through the Saxo Academy. Whether you are new to trading, or you are refining your strategy, there is something for you. Learn more.

Stay in longer.

Take comfort in the certainty that existing FX positions can be fully hedged at a guaranteed price, whilst also benefitting from participation in favourable market movements depending on what happens to the spot price over the life of the option.

More market opportunities at a great price.

Saxo provides competitive prices and tight spreads on a broad range of market opportunities across the globe, easily and quickly via our trading platforms. Rates are always clear and transparent.

More market opportunities.

at competitive prices.

We deliver access to competitive pricing and tight spreads – all in one click. Use our platform to trade on live streaming prices for full transparency.

Spreads as low as.

Whether you are new to the possibilities of FX options or looking for advanced training, the Saxo Academy has something for you. Click here for bite-sized videos on specific issues, or commit to a more extensive online training module.

FX Options Product Guide.

Learn more about trading FX options with Saxo by downloading our comprehensive FX Options Product Guide.

FX Vanilla Options Factsheet.

FX Vanilla options provide the possibility to both buy and sell European style options, giving clients the opportunity to express a directional view in two different ways.

FX Touch Options Factsheet.

FX Touch options provide the possibility to both buy and sell One Touch and No Touch options, giving clients the opportunity to express a directional view in two different ways.

FX Barrier Options Factsheet.

FX Barrier options provide to possibility to buy single Knock-In and Knock-Out options, giving clients the opportunity to express a directional view by utilising the volatility of the underlying currency pair.

An introduction to Forex Options.

Whether expressing a view on an underlying market or using them as a hedging tool, Forex Options don't have to be complicated.

Call Options Examples.

Walk through an example of trading EURUSD via a call option.

Put Options Examples.

Think a currency pair is overvalued? You can express that point of view via a put option.

Shorting Vanilla Options.

Find out about how you can earn a premium from an option but also how you might face an obligation to the owner.

Transparent and reliable access to trade FX spot and forwards in 100+ currency pairs.

Contract Options.

75 Contract Options in many asset categories including metals, energy and interest rates.

An option is categorised as a red product as it is considered an investment product with a high complexity and a high risk.

You should be aware that in purchasing Foreign Exchange Options, your potential loss will be the amount of the premium paid for the option, plus any fees or transaction charges that are applicable, should the option not achieve its strike price on the expiry date.

Saxo Services & Products.

Contact Us.

Saxo Bank A/S (Headquarters)

Philip Heymans Alle 15.

Join our Community.

Losses can exceed deposits on margin products. Please ensure you understand the risks.

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Is it possible to trade forex options?

Yes. Options are available for trading in almost every type of investment that trades in a market. Most investors are familiar with stock or equity options, however options are available to the retail forex currency trader as well.

Currency Option Trading.

There are two types of options primarily available to retail forex traders for currency option trading. The first is the traditional call or put option.

The call gives the buyer the right to purchase a currency pair at a given exchange rate at some time in the future. The put option gives the buyer the right to sell a currency pair at a given exchange rate at some time in the future. Both the put and call options give investors a right to buy or sell, but there is no obligation. If the current exchange rate puts the options out of the money, then the options will expire worthless.

Alternatively, the other type of option available to retail forex traders for currency option trading is the single payment options trading (SPOT) option. SPOT options have a higher premium cost compared to traditional options, but they are easier to set and execute. A currency trader buys a SPOT option by inputing a desired scenario (ex. "I think EUR/USD will have an exchange rate above 1.5205 15 days from now"), and a premium will be quoted. If the buyer purchases this option, then the SPOT will automatically pay out should the scenario occur. Essentially, the option is automatically converted to cash.

Options are used by forex currency traders to make a profit or protect against a loss. It is also important to note that there is a wide variety of exotic options that can be used by professional forex traders, but most of these contracts are thinly traded because they are only offered over the counter. Because options contracts implement leverage, traders are able to profit from much smaller moves when using an options contract than in a traditional retail forex trade. When combining traditional positions with a forex option, hedging strategies can be used to minimize the risk of loss. Options strategies such as straddles, strangles and spreads are popular methods for limiting the potential of loss in a currency trade. (To learn more on this topic, see Exotic Options: A Getaway From Ordinary Trading .)

Not all retail forex brokers provide the opportunity for option trading within your accounts. Retail forex traders should be sure to research the broker they intend on using to determine whether everything that will be required is available. For forex traders who intend to trade forex options online, for either profit or risk management, having a broker that allows you to trade options alongside traditional positions is valuable. Alternatively, traders can open a separate account and buy options through a different broker.

Because of the risk of loss when writing options, most retail forex brokers do not allow traders to sell options contracts without high levels of capital for protection.

Forex Options Trading Brokers.

A forex exchange option (also called FX option or currency option) is a derivative financial instrument that gives its owner the right to exchange money from one currency to another at a pre-set exchange rate on a particular date (the option owner is not obliged to take advantage of this right).

Let's see how this look in a practical example: a GBP/USD contract for example gives its owner the right to sell £100,000 and buy $200,000 on May 1. The pre-set exchange rate here is 2.000 and the notional amounts that could be exchanged are £100,000 and $200,000.

If the actual exchange rate on May 1 is 1.900 for example, the FX option is exercised letting its owner sell GBP at 2.000 and buy GBP immediately on the spot market, making a profit in the process.

This is why there are a few things you need to look for when shopping for a forex options trading broker:

- Competitive commission rate for your forex transactions.

- Reliable online trading platform to execute your forex options trading.

- Real-time rates, charting and research tools to help you make the right investment decisions.

Below is a list of OTC Forex Options Brokers. If you are looking for exchange traded forex options, check Interactive Brokers, Charles Schwab or Thinkorwim.

Forex Options Trading Brokers.

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PFSOFT adds options trading modul to Protrader platform.

PFSOFT, a broker neutral software developer based in Ukraine, today announced the addition of a options trading functionality to Protrader, its multi-asset trading platform. The new modul, allowing users to trade options along with forex, stocks and futures, is named Option Master. Read more.

PFSOFT adds options trading modul to Protrader platform.

PFSOFT, a broker neutral software developer based in Ukraine, today announced the addition of a options trading functionality to Protrader, its multi-asset trading platform. The new modul, allowing users to trade options along with forex, stocks and futures, is named Option Master. Read more.

Moscow Exchange Introduces New Volatility Index.

Lately, whenever the talk is about on-exchange or over-the-counter trading in Russia, one key word pops up: “Volatility”. Read more.

Saxo Bank Continues Yuan Push, Launches USD/CNH Options.

Danish bank and Forex broker Saxo Bank does not know how to stop when it comes to introducing new trading products and once it started that push into trading with the Chinese Yuan, it has not stepped on the brakes. Read more.

Forex Industry News.

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