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Currency Option

Currency Option

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Published by Aditya

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Published by: Aditya on Jun 14, 2010
Copyright:Attribution Non-commercial

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06/13/2010

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CURRENCY OPTIONCURRENCY OPTION
CURRENCY OPTION PROVIDE THE RIGHT BUCURRENCY OPTION PROVIDE THE RIGHT BUNOT THE OBLIGATION TO BUY OR SELL ANOT THE OBLIGATION TO BUY OR SELL ASPECIFIC CURRENCY AT A SPEICIFIC PRICE ATSPECIFIC CURRENCY AT A SPEICIFIC PRICE AT ANY TIME PRIOR TO A SPECIFIED DATE ANY TIME PRIOR TO A SPECIFIED DATE
 
B
ENEFIT OF OPTIONS
B
ENEFIT OF OPTIONS
 THE USER OF OPTION OBTAINS AN THE USER OF OPTION OBTAINS ANINSURANCE AGAINST THE ADVERSEINSURANCE AGAINST THE ADVERSEMOVEMENT IN EXCHANGE RATE BUTMOVEMENT IN EXCHANGE RATE BUTRETAINS THE OPPORTUNITY TORETAINS THE OPPORTUNITY TOBENEFIT FROM A FAVOURABLEBENEFIT FROM A FAVOURABLEMOVEMENT IN EXCHANGE RATEMOVEMENT IN EXCHANGE RATE
 
 TYPES OF OPTIONS TYPES OF OPTIONS
¨¨
 AMERICAN OPTION AMERICAN OPTION
::--
 AN OPTION AN OPTION WHICH CAN BE EXERCISED ON ANY  WHICH CAN BE EXERCISED ON ANY BUSINESS DAY WITHIN THE OPTIONBUSINESS DAY WITHIN THE OPTIONPERIOD IS CALLED AMERICAN OPTIONPERIOD IS CALLED AMERICAN OPTION
¨¨
EUROPEAN OPTIONEUROPEAN OPTION
::--
 AN OPTION AN OPTION WHICH CAN BE EXERCISED ONLY ON WHICH CAN BE EXERCISED ONLY ON THE EXPIRY DATE IS CALLED THE EXPIRY DATE IS CALLEDEUROPEAN OPTIONEUROPEAN OPTION

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