Optimize your FX trading
The difference is that one of the options will expire worthless, while the other can be traded for a profit.
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More than 40 forex pairs, gold and silver with vanilla calls and puts, any day, any strike to diversify your day trading. AvaOptions includes a professional risk management tool for analyzing your risk, portfolio simulation, and much more. Trade using options stop and limit orders based on premium, giving you added control over your trade entry and exit.
An option buyer absolutely cannot lose more than the price of the option, the premium. Because the right to buy or sell the underlying security at a specific price expires on a given date, the option will expire worthless if the conditions for profitable exercise or sale of the option contract are not met by the expiration date.
An uncovered option seller sometimes referred to as the uncovered writer of an option , on the other hand, may face unlimited risk. This options trading guide provides an overview of characteristics of equity options and how these investments work in the following segments:.
Understanding Options Options are financial instruments that can be used effectively under almost every market condition and for almost every investment goal. Among a few of the many ways, options can help you: This feature gives you an easy and flexible way to trade on margin. Use the value of the assets in your portfolio to reduce your FX Options trading margins. The ultimate tool to manage your FX Options portfolio. Aggregating your Options and spot positions allows you to analyse the risk of your portfolio, so you can plan your strategies accordingly.
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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. Visit the Saxo Academy. Whether expressing a view on an underlying market or using them as a hedging tool, Forex Options don't have to be complicated. Think a currency pair is overvalued? You can express that point of view via a put option. Find out about how you can earn a premium from an option but also how you might face an obligation to the owner.
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 Certain options markets operate on a margined basis, under which buyers do not pay the full premium on their option at the time they purchase it.
In this situation you may subsequently be called upon to pay margin on the option up to the level of your premium. If you fail to do so as required, your position may be closed or liquidated. If you write an option, the risk involved is considerably higher than buying an option.
You may be liable for margin to maintain your position and a loss may be sustained well in excess of the premium received. By writing an option, you accept a legal obligation to purchase or sell the underlying asset if the option is exercised against you; however far the market price has moved away from the strike.