The Saxo Group spans the entire globe with a strong, unified network. For example, a call option on oil allows the investor to buy oil at a given price and date.
Current exchange rates are shown. Choose the action the type of trade, buy or sell. Type the number of units in the trade. Type a hypothetical closing rate for the currency pair for example, a future value you speculate the pair might reach. Alternatively, type the current rate into this field and then change the pre-filled value to a previous rate. Use the Calculate button. To compare new values, just change them and use the Calculate button again to see the results.
How This Tool Works This calculation follows the following formula: Your capital is at risk. Losses can exceed investment. Leverage trading is high risk and not for everyone. For an FX option, cash settlement is made in the same manner, with the settlement calculation using the option expiry date as the start of the calculation.
The settlement convention affects discounting cash flows and must be considered in the valuation. Regarding the possible input formats, the users can specify the conventions for the two currencies of the FX rate manually, in a combined or separate manner. For the former, two elements can be taken in as maturity descriptor and holiday convention that are shared for both currencies.
For the latter, five elements can be taken in as one set of maturity descriptor and holiday convention for the currency one, another set of similar inputs for the currency two and an additional input of holiday convention. This corresponds to the most generic specification of the settlement convention that can be used for cross rate trades, e.
These and other assumptions allow us to utilize generic option models, such as Black-Scholes , in the valuation of FX options. It is always important to understand what the expected payoff is because once the payoff is known the inputs to the option functions will be clear. As an example, if the strike rate is 1. Introduction Foreign exchange options are an alternative to forward contracts when hedging an FX exposure because options allow the company to benefit from favorable FX rate movements, while a forward contract locks in the FX rate for a future transaction.
Calculate fair value and risk statistics for a European, American or Asian FX option; Calculate fair value, risk statistics and risk report of a European FX option with settlement convention; Calculate fair value and risk statistics for a European or American exercise single barrier FX option; Calculate fair value and risk statistics for a European or American exercise double barrier FX option.
The option is a double knock-out barrier option, and the payoff may be vanilla or binary type: The payoff is a fixed amount of cash if the barrier is breached; otherwise, nothing if the barrier is never breached, and vise versa; Calculate fair value and risk statistics for a binary barrier FX option.