Exotic currency options

Barrier option is a contract which grants the holder the right, but not the obligation, to buy (Call Option) or sell (Put Option) a specific amount of one currency against payment of the agreed amount in another currency with settlement at a predetermined time in future. This right may only be exercised if the option is knocked-in or knocked-out and the buyer of the option pays a premium for it.

• The barrier knock-in option means that the currency option is only knocked in once the agreed barrier exchange rate is reached. If the barrier exchange rate is not reached by the expiration date, the option expires without settlement.
• The barrier knock-out option means that the currency option is active, and unless the agreed barrier exchange rate is reached, it is settled in a standard manner. Otherwise, that is if the agreed barrier level is reached, the option is knocked out and expires worthless on the expiration date.

• The buyer of a Call Option acquires the right to buy the agreed volume of a given currency for the agreed strike price on the date of settlement.
• The seller of a Call Option is obliged to sell, at the buyer’s demand (right exercised by the buyer), the agreed volume of a given currency for the agreed strike price on the date of settlement.
• The buyer of a Put Option acquires the right to sell the agreed volume of a given currency for the agreed strike price on the date of settlement.
• The seller of a Put Option is obliged to buy, at the buyer’s demand (right exercised by the buyer), the agreed volume of a given currency for the agreed strike price on the date of settlement.

Product features

An option buyer has an unlimited opportunity to participate in the favourable market development.
Lower costs (premium) compared to the currency option.

Product variants

• European style - the underlying market price relative to the barrier price only matters on one specific day (expiry date).
• American style - the underlying market price relative to the barrier price is monitored during the entire period until it expires.
• Option strategy - occurs if 2 or more currency options or barrier options are combined. The goal is to minimise costs and keep the benefits of options. The client normally buys one or more options and, concurrently, sells one or more options.

Binary currency options are transactions in which sellers grant buyers the right to acquire the agreed amount (so-called payout) at the predetermined time, unless the agreed rate is reached (or, on the contrary, once the agreed rate is reached). For this right, a premium is paid to the broker. Binary options are generally used as a part of option strategies or other types of combined products.

Product features
 
The buyer of the option knows the eventual payout amount in advance.
A premium is paid by the buyer for the above option.

Product variants

• European style - reaching of the agreed rate is only monitored on one specific day (expiry date).
• American style - reaching of the agreed rate is monitored during the entire period until it expires.
• No touch/One touch - the reaching of one agreed rate only is monitored.
  Double no touch/Double one touch - the reaching of two agreed rates is monitored.