cashbackforexbtc East forex cashback forexcashbackcalculator Eastforexcashback (ForeignExchangeOptionTrading) foreign exchange options trading overview foreign exchange options trading refers to: the two sides of the transaction in the specified period according to the agreed terms cashback forex certain exchange rate, on the future whether to buy or sell a foreign exchange option to buy and sell the transaction foreign exchange options trading is the early and mid-1980s a financial innovation, is a new method of foreign exchange risk management. Is a new method of foreign exchange risk management In December 1982, foreign exchange options trading in the United States Philadelphia Stock Exchange first, after the Chicago Mercantile Exchange, Amsterdam European Options Exchange and Canadas Montreal Exchange, London International Financial Futures Exchange, etc. have opened foreign exchange options trading at present, the United States Philadelphia Stock Exchange and Chicago Board Options Exchange is the world has Representative of the foreign exchange options market, operating foreign exchange options types include British pounds, Swiss francs, German marks, Canadian dollars, French francs, etc. Foreign exchange options trading is an effective means for customers to preserve the value of future foreign exchange funds on or before the expiration date, the buyer of the option has the right to decide whether to buy or sell a certain amount of foreign exchange in accordance with the contract price In order to obtain this right, the buyer of the option needs to pay a fee at the beginning of the transaction If the buyer of the option does not exercise the right at the end of the contract period, the right expires and the fee is not refundable. The difference between foreign exchange option trading and forward foreign exchange trading is that forward foreign exchange trading locks in the future exchange cost and completely avoids risk, whether it is a favorable opportunity or an unfavorable risk; while foreign exchange option trading manages risk, i.e., hedges unfavorable risk for a certain fee while retaining a favorable opportunity to profit from it. Favorable opportunities to profit from them For example, a customer has to return the yen debt in three months, but its recurring income is only in U.S. dollars In order to prevent the exchange rate risk caused by the appreciation of the yen when exchanging dollars for yen in the next three months, the customer can purchase a three-month period of yen buying rights, the options execution price is linked to the fee, the customer can determine the execution price according to the cost of capital budget and risk tolerance if in expiration date or before, the market price for customers than the execution price is good, customers can not implement the contract, but in the spot market to buy the yen at a better price; if the market price for customers than the execution price is poor, then customers can implement the contract, so that the total cost of customers is at most in addition to the execution price plus an option fee, and the door to reduce this cost is open to foreign exchange options trading Features 1, whether to perform the foreign exchange trading contract or to abandon the performance of the foreign exchange trading contract, the option transaction fee paid by the buyer of foreign exchange options can not be recovered 2, the foreign exchange options trading agreement rate is the U.S. dollar as the quotation currency 3, foreign exchange options trading generally uses the design of the contract 4, foreign exchange options trading rights and obligations of buyers and sellers are not equal, that is, the buyer of the option has the right to choose, the option The seller of the option assumes the right to be chosen and may not refuse to accept it. 5. The benefits and risks of the buyer and seller of foreign exchange options trading are asymmetrical. Flexibility, that is, you can have the right to choose in favor of their own exchange rate for foreign exchange trading, to eliminate the losses brought about by changes in the exchange rate, to seek the gains brought about by changes in the exchange rate 1. Prevent unfavorable changes in the exchange rate losses, but also to obtain the benefits of favorable changes in the exchange rate For example, an American importer, 3 months after the need to pay a pound sterling payment, he is not sure whether the pound sterling exchange rate is up or down, when he can buy the pound buy option If 3 months later, the pound exchange rate rose, the dollar exchange rate fell, he can sign a contract in accordance with the 3 months ago, that is, according to the agreed exchange rate and If 3 months later, the pound depreciated, the dollar appreciated, then he can let the option expire, that is, the exercise of the right not to buy, according to the spot rate at the time from the spot market to buy the pound, from which the pound exchange rate fell benefits again, for example, an American exporter, 3 months later to receive a pound payment, he can be sure that the pound exchange rate will change significantly, but Can not be sure of the trend of the pound exchange rate, if not sold in the forward foreign exchange market, he is worried about the delivery of the pound exchange rate fell and suffered losses, so that its export profits or even become a loss if sold in the forward foreign exchange market, he is worried about the delivery of the pound exchange rate rose, and the loss of profits brought about by the appreciation of the pound so the best choice is to participate in foreign exchange options trading, that is, buy foreign exchange sell options so that both To protect the exchange rate down from losses, but also to get the exchange rate rise in profits, of course, to pay the price of the option fee 2. can control the loss of speculative failure for speculators, they participate in foreign exchange options trading is to give their foreign exchange speculation insurance, control the loss of speculative failure if they predict that a certain exchange rate will rise, but can not be very sure, they can buy to buy foreign exchange options, that is, to do "long" speculative transactions if the exchange rate does rise by the delivery date, they will exercise the right to buy; if the exchange rate falls, they will exercise the right not to buy, only to lose the right fee so they are not predicted to pay for the price is only a small amount of option fees if they predict that a certain exchange rate will fall, but not They can buy and sell foreign exchange options, that is, do "short" speculative transactions, the same can avoid the huge losses brought about by inaccurate exchange rate forecasts Generally speaking, foreign exchange options trading control and reduce the risk of foreign exchange transactions, but in practice, because of the role of options trading control risk, so that speculators to speculate on the boldness More and more, the scale is also growing, so that the financial risk is greatly increased foreign exchange options and forward foreign exchange contracts Foreign exchange options are different from forward foreign exchange contracts, the latter has the obligation to execute the sale and purchase of foreign exchange contracts on the expiration date, foreign exchange options contracts with the contract holders will to choose to execute or not to execute the contract contract termination date is called expiration date each option contract specifies the number of foreign currency traded, expiration date, execution price and option price (premium) according to the contracts executable date, options trading is divided into American-style options and European-style options if the option can be executed before the expiration date, known as American-style options; if only in the expiration date, said European options foreign exchange option holders in the expiration date or before the execution of the agreed-upon exchange rate to buy or sell options called the execution price (excerciseprice) or agreement price ( strikeprice) execution price (exchange rate) is selected before predetermined, which is different from the forward rate, forward discount or premium is decided by the bank buying and selling foreign exchange options to pay a fee to the seller, called the option price (optionprice), or premium (premium) types of foreign exchange options transactions According to the characteristics of foreign exchange transactions and options transactions According to the characteristics of foreign exchange trading and options trading, foreign exchange options trading can be divided into spot options trading and foreign exchange futures options trading spot options trading (optionsonspotexchange) is the option buyer has the right to purchase a certain amount of foreign exchange spot at or before the expiration date of the option at the agreed exchange rate, called the option to buy (calloption), or sell a certain amount of foreign exchange spot, called Sell option (putoption) operating international spot options is mainly the United States of Americas Philadelphia Stock Exchange Chicago International Monetary Market and the United Kingdoms London International Financial Futures Exchange Foreign exchange futures options trading is the option buyer has the right to buy or sell a certain amount of foreign exchange futures at the agreed exchange rate on or before the expiration date, that is, buy delayed buy option allows the option buyer to obtain foreign exchange at the agreed price The option buyer has the right to buy or sell a certain amount of foreign exchange futures at an agreed exchange rate on or before the expiration date, i.e., the option buyer can acquire a long position in foreign exchange futures at an agreed price; the option seller can buy an extended sale option to establish a short position in foreign exchange futures at an agreed price The buyer can exercise the futures option after the same delivery as the foreign exchange futures delivery, and the difference with the cash option is that the foreign exchange futures option is valid for the U.S. style, i.e., it can be exercised at any time before the expiration date Exchange two foreign exchange options trading way At present, the worlds foreign exchange options trading market has the exchange over-the-counter market (TheExchange-TradedMkt) and the over-the-counter market (TheOver-the-CounterMkt) two kinds of over-the-counter options trading refers to the options trading traded on the exchange this kind of options trading options contracts are standardized, the The expiration date, notional principal, delivery location and agent, execution price, margin system, option position limits, trading hours, and performance regulations are all set by the exchange; only the exchange members are entitled to deal, non-members are not allowed to participate directly, and need to entrust the on-course member brokers to deal; the options clearing house OCC settles the profit and loss of both sides of the options transaction The most famous options exchange is the Philadelphia Exchange (PHLX), other famous ones are Chicago CME, CBOE, London LIFFE, LSE Exchange, etc. This book only discusses the over-the-counter options market OTC options trading refers to options trading without going through the stock exchange and through telephone and telex In fact, the United States and Switzerland banks and certain financial companies in the organized exchange engaged in foreign exchange options trading before the beginning of over-the-counter foreign exchange options trading In July 1984 began to implement a formal trading system, in the business information screen (such as Reuter, Telerate) unsigned options prices, in order to expand the options trading market inter-bank whole lot trading options contract notional principal amount of more than one million U.S. dollars OTC options trading is the main advantage of the contract notional principal amount and flexible conditions, according to the customers special needs and set (tailed) Of course, the purchaser of the option must assess the creditworthiness of the bank selling the option.