OTC FX Options at ICM Brokers
Foreign Exchange options (FX Options) are derivative instruments that give the owner the right but not the obligation to exchange one currency into another currency at a pre-agreed exchange rate on a specified date.
Even though trading in these derivative instruments can be more advanced than dealing in the outright spot FOREX market, FOREX Option can however allow investors to diversify their trading strategies and hedge FOREX exposure.
Advantages of Trading FX Options with ICM Brokers
- Investors can limit their downside risk to the option premium (the amount paid to purchase the option)
- Profit potential may be maximized during correct market moves on the underlying instrument
- Often the price of the up-front price of the option may be less than a regular Spot FOREX position
- Investors can set their desired strike price and expiration date
- Options can be used to hedge against open spot positions in order to limit risk
- Spot Traders can use options to predict market moves before the fundamental events take place, without risking a big capital outlay
About the FX Options Market
FX Options give traders many opportunities to limit risk and increase profit. The FX options market is the deepest, largest and most liquid market for options in the world. Most of the volume on these derivative instruments is traded over-the-counter through the interbank market; though a small percentage is also traded on futures exchanges (options on futures).