OPTIONS

sunandaC

New member
Option is a contract wherein the buyer of the option has the right but no obligation to buy or sell a specific quantity of a particular asset, at a specified price at or before a specific date in the future. An option may increase, decrease or remain unchanged in value depending on the price around which the particular commodity is trading.

Options may represent the right to buy or sell commodities, equities, currencies or even futures on other securities. An option on a future would allow the owner the right to buy or sell the future agreement at specific price within a specific time frame i.e. a derivative on a derivative.

Options trade in organized markets, much like the stock market, However, a large amount of option trading is conducted privately between two parties who find that contracting with each other preferable to exchange. Options Exchange as the counter party helps to minimize the counter party credit risk. Adequate collateral is ensured by a market-adjusted margin.

Currency Options

Currency options is a contract wherein the buyer of the option has the right to buy or sell a fixed amount of one currency versus another at a fixed rate on a date in future but has no corresponding obligation. The rate, currencies, amount and date are predetermined, at the time of entering contract.

Currency options are useful tools to limit losses and for unlimited access to unlimited profit potential in volatile market. Writing currency options is a profitable business in calm market. Option contracts are ideal while carrying out ongoing transactions where outcome is uncertain.

Option provides the best tools to hedge balance-sheet translation exposures. Example 1 will show hedging FX risk through option. Example 2 will show a comparison of a Foreign Currency Forward / Future Hedge and Option Hedge.

Currency options and futures are among the oldest forms of options and futures products. Traded currency options are divided into two types- options on cash and options on futures.

Cash Currency Option is the right to buy or sell a fixed quantity of one currency in exchange for a specific quantity of another currency in a ratio by a specific exchange rate at or before a specific future date. Futures Currency Option is the right to buy or sell a traded currency futures contract at a specific futures price at or before a specific date in the future.

Using these products many banks make markets in more complicated foreign exchange linked derivatives such as currency swaps and long dated swaps and combinations of the above.

Access to currency options and futures ensures that borrowers have access to the lowest cost capital markets around the world.

Foreign exchange fluctuations affect the competitive positions of companies, the cost of borrowing abroad and the returns on global investment portfolios. Precise commercial and financial objectives can be managed through products in foreign exchange markets.
 

rosemarry2

MP Guru
Option is a contract wherein the buyer of the option has the right but no obligation to buy or sell a specific quantity of a particular asset, at a specified price at or before a specific date in the future. An option may increase, decrease or remain unchanged in value depending on the price around which the particular commodity is trading.

Options may represent the right to buy or sell commodities, equities, currencies or even futures on other securities. An option on a future would allow the owner the right to buy or sell the future agreement at specific price within a specific time frame i.e. a derivative on a derivative.

Options trade in organized markets, much like the stock market, However, a large amount of option trading is conducted privately between two parties who find that contracting with each other preferable to exchange. Options Exchange as the counter party helps to minimize the counter party credit risk. Adequate collateral is ensured by a market-adjusted margin.

Currency Options

Currency options is a contract wherein the buyer of the option has the right to buy or sell a fixed amount of one currency versus another at a fixed rate on a date in future but has no corresponding obligation. The rate, currencies, amount and date are predetermined, at the time of entering contract.

Currency options are useful tools to limit losses and for unlimited access to unlimited profit potential in volatile market. Writing currency options is a profitable business in calm market. Option contracts are ideal while carrying out ongoing transactions where outcome is uncertain.

Option provides the best tools to hedge balance-sheet translation exposures. Example 1 will show hedging FX risk through option. Example 2 will show a comparison of a Foreign Currency Forward / Future Hedge and Option Hedge.

Currency options and futures are among the oldest forms of options and futures products. Traded currency options are divided into two types- options on cash and options on futures.

Cash Currency Option is the right to buy or sell a fixed quantity of one currency in exchange for a specific quantity of another currency in a ratio by a specific exchange rate at or before a specific future date. Futures Currency Option is the right to buy or sell a traded currency futures contract at a specific futures price at or before a specific date in the future.

Using these products many banks make markets in more complicated foreign exchange linked derivatives such as currency swaps and long dated swaps and combinations of the above.

Access to currency options and futures ensures that borrowers have access to the lowest cost capital markets around the world.

Foreign exchange fluctuations affect the competitive positions of companies, the cost of borrowing abroad and the returns on global investment portfolios. Precise commercial and financial objectives can be managed through products in foreign exchange markets.

Hey dear,

Here I am uploading Notes on Equity Options Strategy, so please download and check it.
 

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