We value your privacy. To start, simply fill in your email address:. Collected premium covers the potential downside losses to some extent. When trading currency options, you first need to keep in mind that time really is money and that every day you own an option will probably cost you foor terms of time decay. This can be thought of as deductible insurance.




When you sell a foreign exchange put option, you are selling the right to sell currency. Therefore, you become the buyer of currency and have no option. The buyer of the put option has the right to sell currency to you. You collect the premium and need to accommodate the decision of the buyer regarding exercising his option. Suppose the expiration date is puy month from now. But his gain is your loss.

The premium that you collect and the spot optione rate at which you sell euros are your total selling price or what you receive optikns these transactions. The exercise price on the put option is the exchange rate at which you buy euros. In the case of selling the put option, the buyer of the put option can optoons his loss to the premium, while his profits have no limits. You, the seller of the put option, can make a maximum per-unit profit that equals the premium; however, your loss has no limits.

Selling Foreign Exchange Put Options. International Finance For Dummies Cheat Sheet. Top Ten Traded Currencies of the World. Predict Changes in the Euro—Dollar Exchange Rate. International Finance For Dummies.




3 Minutes! Put Options Explained - Call and Put Options for Options Trading for Beginners Tutorial


A foreign exchange put option gives you the right to sell foreign currency. As in the case of call options, put options To Exercise or Not to Exercise Put Options ;. Options for Trading Investment Assets: Calls and Puts ; Options for Trading Investment Assets: Calls and Puts. When you buy a call option, you put up the option. A currency option is a type of foreign exchange derivative contract that Currency Options when the mining producer's AUD Call /USD Put option expires.