FX options not only enable clients to express a directional trading view but also offer more alternatives in relation to controlling risk, in addition to a traditional stop loss order. The holder of an option long pays a premium for the right to exercise the option at a profit, or let the option expire with no further obligation. The writer of an option short receives the premium and assumes the possible liability of having to pay the difference between the strike price and market price at maturity.
The price is calculated in pip terms of the 2nd currency. Pricing is available for options with maturities from 1 day to 12 months, providing you with maximum flexibility to implement your trading strategies and market views. Spreads may vary depending on the life of the option and the currency pair. See all live FX options spreads for 30 day at-the-money options. Saxo reserves the right to apply different spreads for notional amounts exceeding market standard or for clients requiring a specific level of service.
Trades can not be executed below the minimum trade size. Minimum trade sizes are as follows: Small trade sizes incur a minimum ticket fee of 10 USD. A small trade size is any trade below the commission threshold which for most currency pairs is 50, units of base currency, however variations occur. Full details can be found here. The holder of an option long pays a premium and possibly receives a payout.
The writer of an option short receives the premium and possibly has to pay the payout. The pricing model that Saxo uses is similar to the one applied to Vanilla options based on Black-Scholes model , with the price being expressed as a percentage of the potential payout. Tradable tenors from 1 day to 12 months. The price of a Touch option is called the Premium and is expressed as a percentage of the potential payout. For long positions you pay the premium and for short positions you receive the premium.
If it doesn't reach the trigger level of 1. You should be aware that in purchasing Foreign Exchange Options, your potential loss will be the amount of the premium paid for the option, plus any fees or transaction charges that are applicable, should the option not achieve its strike price on the expiry date Certain options markets operate on a margined basis, under which buyers do not pay the full premium on their option at the time they purchase it.
In this situation you may subsequently be called upon to pay margin on the option up to the level of your premium. If you fail to do so as required, your position may be closed or liquidated. If you write an option, the risk involved is considerably higher than buying an option. You may be liable for margin to maintain your position and a loss may be sustained well in excess of the premium received. By writing an option, you accept a legal obligation to purchase or sell the underlying asset if the option is exercised against you; however far the market price has moved away from the strike.
If you already own the underlying asset that you have contracted to sell, your risk will be limited. If you do not own the underlying asset the risk can be unlimited. Only experienced persons should contemplate writing uncovered options, then only after securing full detail of the applicable conditions and potential risk exposure. Losses can exceed deposits on margin products. Please ensure you understand the risks. Apple, iPad and iPhone are trademarks of Apple Inc.
App Store is a service mark of Apple Inc. Minimum trade size Trades can not be executed below the minimum trade size. Maximum streaming amounts are subject to change without prior notice. Minimum ticket fee Small trade sizes incur a minimum ticket fee of 10 USD. Trading Long buying When buying an option, you have to pay the full Premium in cash. The Premium is subtracted from the Cash Balance initially shown as 'Transactions not booked'.
At the end of the day it is subtracted from the Cash Balance. The current value positive of the bought position is displayed in 'Non-margin positions' and subtracted from 'Not available as margin collateral'. Thus, you cannot use the value of Touch options for margin collateral.
Trading Short selling When selling writing an option, you need to have the cash sufficient for the potential payout in the event of an exercise One Touch or expiry No Touch. The Premium is added to the Cash Balance initially shown as 'Transactions not booked'.
At the end of the day it is added to the Cash balance. The current value negative of the sold position is displayed in 'Non-margin positions'. In order to reserve the full potential payout the difference between the current value and the potential payout is subtracted from 'Not available as margin collateral'. Hence, your full potential loss from the option payout is thus not available for margin collateral.
FX Options Risk Warning. Your browser cannot display this website correctly. Our website is optimised to be browsed by a system running iOS 9. X and on desktop IE 10 or newer. If you are using an older system or browser, the website may look strange. To improve your experience on our site, please update your browser or system. When buying an option, you have to pay the full Premium in cash. When selling writing an option, you need to have the cash sufficient for the potential payout in the event of an exercise One Touch or expiry No Touch.More...