Financial instruments in the foreign exchange market, such as foreign exchange forward, foreign exchange futures, foreign exchange options, foreign exchange swaps, etc., are different and related, and each has its own advantages and disadvantages. Judging from a series of comprehensive factors such as hedging methods, transaction costs and settlement, foreign exchange options have comparative advantages. Foreign exchange option is a kind of option, that is, the option buyer obtains a right after paying the corresponding option fee to the option seller, and has the right to buy and sell the agreed currency at the agreed exchange rate and amount on the agreed expiration date. At the same time, the right buyer also has the right not to execute the above sales contract. Foreign exchange forward is a contract in which both parties agree to deliver a financial asset at an agreed price and manner in the future. It is a non-standardized contract, and the OTC foreign exchange forward is a one-to-one relationship. Foreign exchange option is a standardized contract, and both parties agree to deliver a certain amount of financial assets at an agreed price and manner in the future. It is an on-market derivative instrument with the characteristics of leveraged trading, two-way trading and T+0. In recent years, the trading volume of foreign exchange options has been rising and the market activity has been increasing. It is the development and supplement of several original foreign exchange hedging methods, which not only provides customers with foreign exchange hedging methods, but also provides customers with opportunities to profit from exchange rate changes, and has great flexibility. According to the data provided by Shang Zhi, in the first three quarters of 20 15, the electronic execution volume of foreign exchange options under Shang Zhi reached the highest level in history, up by 7% year-on-year. From 2065438 to March 2005, the average daily trading volume of foreign exchange options reached 20 1 12 contracts, setting a record high. Comparing foreign exchange options, foreign exchange forwards and foreign exchange futures, we can find that foreign exchange options not only have the same function of avoiding exchange rate risks and fixed costs as foreign exchange forwards and foreign exchange futures, but also overcome the limitations of foreign exchange forwards and forex futures trading, so they are favored by international financial markets. Compared with foreign exchange forward, foreign exchange options have the following advantages: first, if investors close their positions before the option expires, their gains or losses will be settled immediately and merged into cash; Every transaction of foreign exchange forward trading has a clear fund settlement delivery date, and according to the rules of forward trading, even if the customer has hedged the transaction, the income gained from the investment will not be realized until after the delivery date. If the transaction loses money, the loss amount will be frozen from the hedging trading day until the delivery date. Second, the personal foreign exchange option business adopts the "difference settlement" mode, which automatically provides customers with due settlement. Investors do not need to provide the transaction principal, but each transaction of personal foreign exchange forward business requires investors to provide the principal for full settlement, which increases the capital cost of investors. Comparing foreign exchange options with foreign exchange futures, we can find that foreign exchange options also have relative advantages: first, in foreign exchange options trading, the option buyer only has the right to buy or sell futures contracts at the price stipulated in the contract, but has no obligation to buy or sell them; In forex futures trading, the buyer and the seller have equal rights and obligations in the contract. Second, in forex futures trading, buyers and sellers invest in futures contracts in the form of trading margin. However, in foreign exchange option trading, the buyer pays the option fee, but does not pay the deposit; The seller charges the option fee, but pays the deposit. Thirdly, theoretically, in forex futures trading, with the change of futures prices, both buyers and sellers are facing unlimited profits and losses. In foreign exchange option trading, the potential profit of the buyer is uncertain, but the loss is limited and the maximum risk is certain; On the contrary, the seller's income is limited, but the potential loss is uncertain. Fourthly, the ways of hedging risks of foreign exchange options are more diversified, not only through a single option contract, but also through multiple options, options and futures, options and forward contracts to hedge potential risks. Fifth, foreign exchange options can not only hedge potential risks or capture investment opportunities from long and short directions, but also be bullish or bearish on the future volatility of the underlying asset price, so as to hedge risks or gain income by judging whether the future volatility is increasing or decreasing when the foreign exchange direction cannot be determined. It is particularly worth mentioning that the price of foreign exchange options has the nature of reflecting the implied volatility of the market, which can more effectively predict risks and comprehensively manage related currency risks in an event that shakes the financial market like Britain's withdrawal from the European Union. Quikstrike, a subsidiary of Shang Zhi Research Institute, provides a volatility term structure tool for investors' reference.