Foreign exchange options are different from forward foreign exchange contracts. Forward foreign exchange contracts are obliged to execute foreign exchange contracts at maturity, while foreign exchange options contracts choose to execute or not to execute the contracts according to the wishes of contract holders. The termination date of the contract is called the expiration date. Each option contract specifies the amount of foreign currency to be traded, maturity date, exercise price and option price (insurance premium). According to the execution date of the contract, options trading can be divided into American options and European options. If an option can be exercised before the expiration date, it is called an American option; If it can only be exercised on the maturity date, it is called a European option. When the holder of foreign exchange options buys or sells options on or before the expiration date, the agreed exchange rate is called the strike price or strike price. The strike price (exchange rate) is set after selection, which is different from the forward exchange rate. The forward discount or premium is determined by the bank that buys and sells foreign exchange. The buyer of a foreign exchange option pays a fee to the seller, which is called the option price or premium.