What Are the Pros and Cons in Trading Forex Options
More and more traders are choosing to trade forex options. This is because they manage to weigh the pros and cons and they find that the former far outweighs the latter. Currency options is an agreement or a contract between the option buyer and the option seller that gives the buyer the right, with no underlying obligation, to buy or sell an option. It is the buyer that dictates the strike price and the expiry date of the option. If the expiration date comes, the buyer may choose to exercise his option and buy the currency or he may opt to just let the option expire worthless. All he needs to pay for is the premium. Defibrillator battery Given this definition, forex option trading indeed poses many advantages over some of the financial instruments used in various exchanges. The premium assigned to an option may vary according to the option's date and strike price making the reward as well as the risk ratio also vary. Once the trader purchases a SPOT option, he may not change his mind to sell it. Predicting the scenario for a good time and date for the option may not be an easy task. Lastly, option trading is sometimes taken as going against the odds. Other than these, nothing bad can be said about currency option transactions.