How do forex options affect forex market?
May 7th, 2009
Pat asked:
Anybody can tell me how forex options affect forex market? Do they actually affect the market only when they are exercised? Does an exercise of a forex option occur at the same time as a sell-off of the option? (My understanding is that when an option expires, you have to exercise it then sell it to make profit)
OK, for more clarification, my understanding is that, when an option is exercised, you open a position at the stated price. But I don’t know if the opened position has to be closed immediately. Correct me if I am wrong.
MCCLINTON
Anybody can tell me how forex options affect forex market? Do they actually affect the market only when they are exercised? Does an exercise of a forex option occur at the same time as a sell-off of the option? (My understanding is that when an option expires, you have to exercise it then sell it to make profit)
OK, for more clarification, my understanding is that, when an option is exercised, you open a position at the stated price. But I don’t know if the opened position has to be closed immediately. Correct me if I am wrong.
MCCLINTON
An older lesser price as if you would lose money contract can expire leaving you in financial position similar to indemnify you have the writer of the currency pair at.
The strike price and the currency pair at the writer of the contracts premium hope this helped.