Options, also known as options, first started from stock options trading, and foreign exchange options only came into being in the 1980s. The first foreign exchange options are the pound option and the Deutsche Mark option, which were undertaken by PhiladelphiaStockExchange at 1982, and are variants of the established stock option trading. The emergence of foreign exchange options is attributed to two important factors: the increasingly fierce exchange rate fluctuation in the international financial market and the development of international trade. With the emergence and final collapse of the Bretton Woods monetary system crisis in the early 1970s, the exchange rate fluctuated more and more violently. For example, during the period of 1959- 197 1, the daily average fluctuation range of the German mark against the US dollar was 0.44 cents, while during the period of1971-kloc-0/980, it increased by nearly/kloc-. At the same time, international trade in goods and services is also growing rapidly. Facing the market with drastic exchange rate changes, more and more traders are looking for more effective ways to avoid foreign exchange risks.

On the basis of forward foreign exchange and currency futures, options not only have the same function of avoiding exchange rate risk and fixed cost, but also overcome the limitations of forward and futures trading, so they are favored by international financial markets. Option trading is especially beneficial for those continuous transactions, such as bidding for foreign projects or dividends of overseas companies and other uncertain income or investment hedging.