Why Trade Fx Options
Here are a few of the benefits of trading FX options over FX spot:
- You can limit your risks (maximum potential loss is the premium if you are the buyer) and still have unlimited profit potential.
- Options require less money up front than if you take a regular spot position. This is because you don't buy the asset itself but only a contract that gives you the right to either buy or sell the asset at a given price. Therefore, if you are the buyer, you only have to pay the premium upfront. On the other hand, if you are the seller of an option, you receive the premium upfront, but then you have the possibility of an unlimited loss when you close the position.
- Options offer important hedging opportunities.
- FX Options are traded OTC (over-the-counter), which essentially means that you decide the strike price, the exercise date and the currency pairs involved in the option contract.
- Trading FX Options at InterForex allows you to trade on live, streaming prices for nine major currency pairs.