What is an OTC currency option?

Currency option transaction (FX OTC option) is a transaction giving the option purchaser, who has paid a fixed premium to its seller, the right, but not the obligation, to buy or sell a fixed amount of foreign exchange at a fixed price per unit in the future.

Can you buy options on FX?

In addition to traditional stop-loss orders, FX options offer more alternatives to controlling risk. They can be used to hedge current FX positions, or express a view on future volatility.

What is OTC IQ option?

IQ Option provides 8 OTC assets. These are GBPUSD, AUDUSD, EURUSD, USDCAD, USDCHF, NZDUSD, Gold and USDJPY. They are available for Fixed Time Trades. You will see the rate of a return next to each asset.

Is an FX forward an OTC derivative?

Currency forwards are OTC contracts traded in forex markets that lock in an exchange rate for a currency pair. They are generally used for hedging, and can have customized terms, such as a particular notional amount or delivery period.

Are Forex options liquid?

The foreign exchange options market is the deepest, largest and most liquid market for options of any kind.

How are FX options traded?

FX option contracts are typically traded through the over-the-counter (OTC) market so are fully customisable and can expire at any time. In the spot options market, when you buy a ‘call’, you also buy a ‘put’ simultaneously.

How are FX options valued?

How is the cost of an FX option determined?

FX option premium = intrinsic value + time value.
Intrinsic value: The intrinsic value of the option is the difference between the amounts converted using the strike rate and the forward rate.

What does OTC mean in pocket options?

over-the-counter
OTC options are exotic options that trade in the over-the-counter market rather than on a formal exchange like exchange traded option contracts.