Chapter 7

Currency Options

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

  • Describe currency options and understand their relevance.

  • Identify different forms of options.

  • Explain the payoff profiles of standard options.

  • Understand the concept of option value.

  • Discuss the determinants of currency option price.

  • Analyse options trading strategies.

  • Explain the applications of options pricing models.

  • Discuss option Greeks.

  • Define options on futures.

  • Distinguish between forwards and options, and analyse when each of these is appropriate.

  • Discuss options trading in India.

7.1 Introduction

Options are versatile and flexible hedging tools widely used by traders, investors, and speculators. There are different kinds of options, ...

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