FAQ: EN-GB MT4
A currency option or FX option gives the buyer an ‘option’ but not an obligation to buy or sell a foreign exchange currency at a certain exchange rate before or on a pre-determined date. A forex option is a derivative product that provides the feature of utilising leverage and dealing in currencies without having to purchase the tangible currency pair. Find out more about leveraged trading here.
There are two types of forex options available: call and put options. A call option gives you the right to buy a currency, while a put option gives you the right to sell a currency. Once you have placed a call or put option, you then have the options to buy or sell these currencies later. Options can be bought or sold until the expiration date, and are considered low risk as you can withdraw your options contract at any point. Discover the ways you can trade with CMC Markets.
The strike price is the price that the holder of an options contract can buy (call) or sell (put) the currency should they wish to exercise the option contract. With forex call and put options, the strike price is only valid until the expiration date. When determining the value of an option, the strike price is the single most important factor of an option’s value. Try out a demo account to practise your trading strategies.