In finance, a foreign exchange option (commonly shortened to just FX option or currency option) is a derivative financial instrument that gives the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date.[1] See Foreign exchange derivative.[2]
The foreign exchange options market is the deepest, largest and most liquid market for options of any kind. Most trading is over the counter (OTC) and is lightly regulated, but a fraction is traded on exchanges like the International Securities Exchange, Philadelphia Stock Exchange, or the Chicago Mercantile Exchange for options on futures contracts. The global market for exchange-traded currency options was notionally valued by the Bank for International Settlements at $158.3 trillion in 2005.[citation needed]
^"Foreign Exchange (FX) Terminologies: Forward Deal and Options Deal" Published by the International Business Times AU on February 14, 2011.
^Hammad, Muhammad. "Fastest Currency Exchange Company". Link International Exchange Company. Farhan. Retrieved 10 June 2023.
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