Definition of Currency option:
A currency option (also known as a forex option) is a contract that gives the buyer the right, but not the obligation, to buy or sell a certain currency at a specified exchange rate on or before a specified date. For this right, a premium is paid to the seller.
Contract that confers the right (but not the obligation) to buy or sell a given amount of a particular currency at a specific exchange rate either (1) on a fixed future date (called European option), or (2) on any date up to a fixed future date (called American option). Philadelphia stock exchange is worlds premier currency options market.
Currency options are one of the most common ways for corporations, individuals or financial institutions to hedge against adverse movements in exchange rates.
How to use Currency option in a sentence?
- Currency options allow traders to hedge currency risk or to speculate on currency moves.
- Currency options come in two main varieties, so-called vanilla options and over-the-counter SPOT options.
- Currency options give investors the right, but not the obligation, to buy or sell a particular currency at a pre-specific exchange rate before the option expires.
Meaning of Currency option & Currency option Definition