OPTIONS

The essence of options - the right (but not the obligation) to buy or sell currencies or securities at a specific time for a predertmined price (strike price). The right to buy is a Call Option, but the right to sell is a Put Option.

Options are set for a fixed period of time.

For example, you purchase an option to buy Currency A, while selling Currency B at Rate X, paying a specified commission to the bank. If, after a while, Currency A trades at less than X, then you can purchase Currency B at the Spot rate. If currency B has risen above Rate X, you may purchase it for less (i.e. at Rate X) by exercising the option.