Foreign exchange option, also known as currency option, refers to the option that the buyer of a contract can buy or sell a certain amount of foreign exchange assets at a specified exchange rate on a future agreed date or within a certain period after paying a certain option fee to the seller. Foreign exchange option is a kind of option. Compared with stock options, index options and other options, foreign exchange options buy and sell foreign exchange, that is, the option buyer obtains a right after paying the corresponding option fee to the option seller, that is, the option buyer has the right to buy and sell the currency agreed by the seller at the exchange rate and amount agreed by both parties in advance on the agreed expiration date, and the buyer with the right also has the right not to execute the above-mentioned sales contract.

Classification:

(1) According to the trading purpose of the option holder, it is divided into: call option, also called call option; Put option, also known as put option.

(2) According to the original financial products that generate option contracts, it can be divided into: spot foreign exchange options, that is, spot foreign exchange is the basic asset of option contracts; Foreign exchange futures options, that is, currency futures contracts, are the basic assets of option contracts.

(3) According to the time when the option holder can exercise the delivery right, it can be divided into: European option, that is, the option holder can only decide whether to execute the option contract before 9: 30 am new york time on the option expiration date; American option means that the option holder can choose to execute or not to execute the option contract before 9: 30am new york time on any working day before the option expiration date. Therefore, American options are more flexible than European options, so the cost price is higher.