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FX Options Trading | Saxo Group

Call and Put options on MT4 can be used to trade currency market direction. If you expect a currency pair to rise you may buy a Call option and if you expect a pair to fall you may buy a Put.

Two things you need to consider when buying options; the strike price and the expiry date. Through buying an option you are reserving a price in the market and that reserved price is known as the strike. The value of an option depends on the market price level relative to the strike price.

The more the strike can 'beat' the market the more the option is worth. Secondly, options with a longer expiry will cost more but they also give more time for your outlook to happen, this could be described as 'buying more time'. You would buy a Call to trade an uptrend because a Call gives the owner the right to buy a currency pair at a certain market rate.

This certain rate is the strike rate. Once you are holding the option, the more the strike can 'beat' the market the more valuable your option becomes. The option costs 0. The more the market rate rises above your strike the more valuable the Call option becomes. When your options value is higher than the price you paid for it, you may sell it for a profit. Your loss is limited to the price you initially paid for the option in this case that is In summary, as the market rate moves UP, above the strike rate,the call option's value increases and if the market moves DOWN, expiring below the strike, a loss is incurred.

The loss is limited yet the position cannot get stopped-out.

This may be useful to trade a volatile uptrend. You would buy a Put to trade a downtrend because a Put gives the owner the right to sell a currency pair at a strike rate. It would cost you 0.

Is it possible to trade forex options?

If the market rate is below the strike rate by expiry the Put option will have value because it allows you to sell at a better rate. The more the market falls, the more valuable the Put option becomes.

Ruger stock market loss is limited to the price you paid in this case that is In summary, as the market rate moves DOWN, below the strike rate,the Put option's value increases and if the market moves UP, expiring above the strike, a loss is incurred.

This may be useful during a volatile downtrend. The possibilities through buying options don't stop there, they can also be used to trade strategies such as straddle and strangles allowing investors to take advantage of increases or decrease in market volatility.

These will be explained in future articles. Information on these pages request for refund of earnest money deposit forward-looking statements that involve risks and uncertainties.

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Trade an uptrend You would buy a Call to trade an uptrend because a Call gives the owner the right to buy a currency pair at a certain market rate. Trade a downtrend You would buy a Put to trade a downtrend because a Put gives the owner the right to sell a currency pair at a strike rate.

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