1. According to the flexibility of exercise time, options can be divided into European options and American options. American options have flexible exercise time and can be exercised before the expiration date, while European options can only be exercised on the expiration date;

2. By option direction: foreign exchange options can be divided into buyer options and seller options. Buyer's option refers to the right of the buyer to pay the option fee and obtain a specific amount of foreign exchange at a specific exchange rate. After receiving the transaction fee, the seller is obliged to conduct foreign exchange transactions according to the requirements of the buyer; The seller's option refers to the buyer's right to sell a specific foreign exchange by paying the option fee, and the seller needs to buy the foreign exchange it sells according to the buyer's requirements;

3. According to different financial products, foreign exchange options can be divided into the following two types: currency options (or spot foreign exchange options) refer to the basic assets based on foreign exchange spot contracts; Futures options are based on currency futures contracts.

What is a foreign exchange option?

As the name implies, foreign exchange options trade foreign exchange relative to other options. That is, the buyer of foreign exchange options can obtain the right to conduct currency transactions with the seller at the agreed exchange rate and amount after paying a certain option fee to the seller. However, this right needs to be exercised within the validity period, and the seller bears the risks that may be brought by exchange rate fluctuations while obtaining the option fee.