At a Glance

Potential to enhance returns

By selling "put" options while waiting to buy a currency at a lower price, or by selling "call" options while waiting to sell a currency at a higher price

Not suitable for all investors

Options carry significant risks and are only recommended for experienced investors

 

Types of Options

There are 2 types of options:

  1. A "Put" option gives the buyer the right but not the obligation to sell the underlying currency at a predetermined price.
  2. A "Call" option gives the buyer the right but not the obligation to buy the underlying currency at a predetermined price.

In both cases the seller of the option is paid a premium by the buyer of the option. Options are not suitable for all investors, as they carry significant risks. Only recommended for experienced investors.

 

Benefits & Risks

Some of the Benefits

Potential to enhance returns:

  • By selling put options while waiting to buy a currency at a lower price
  • By selling call options while waiting to sell a currency at a higher price

Some of the Risks

Selling an option generally entails considerably greater risk than purchasing options and a seller of options may sustain a loss well in excess of the amount of the premium received.

 

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