FX Options trading conditions
FX Vanilla Options
Available for trading in 44 currency pairs, including silver and gold.
Calls (option to buy a currency at a specified strike price) and Puts (option to sell a currency at a specified strike price and date).
Maximum streaming amount is 25,000,000 units of base currency, with a minimum ticket size of 10,000 units. Notional amounts over the maximum streaming amount are available on a Request for Quote (RFQ) basis.
Note. Maximum streaming amounts may be changed without prior notice under volatile or illiquid markets.
Tradable tenors from 1 day to 12 months.
Calculated in pip terms of the 2nd currency. When buying an option the maximum loss is the premium paid, but when selling an option the writer receives the premium however assumes the potential of much greater downside risk.
European-style (the option can only be exercised on the expiry date, i.e. at a single pre-defined point in time).
Expiry is an automatic process, meaning you do not have to call in to manage the exercise or expiry. If the option is in the-money it will automatically settle in the pre-defined exercise method (described in the next point), or the option will automatically expire (cease to exist) at 10am Eastern Standard Time (New York cut) on the expiry date.
Options can only be cash settled. The cash settled exercise method is available on both long and short positions and will always be executed at the mid-price of the best bid/offer spread. This applied even in volatile market conditions.
Not available. Trading is only available on live quotes.
FX Options Risk Warning
An option is categorised as a red product as it is considered an investment product with a high complexity and a high risk.
You should be aware that in purchasing Foreign Exchange Options, your potential loss will be the amount of the premium paid for the option, plus any fees or transaction charges that are applicable, should the option not achieve its strike price on the expiry date
Certain options markets operate on a margined basis, under which buyers do not pay the full premium on their option at the time they purchase it. In this situation you may subsequently be called upon to pay margin on the option up to the level of your premium. If you fail to do so as required, your position may be closed or liquidated.
If you write an option, the risk involved is considerably higher than buying an option. You may be liable for margin to maintain your position and a loss may be sustained well in excess of the premium received.
By writing an option, you accept a legal obligation to purchase or sell the underlying asset if the option is exercised against you; however far the market price has moved away from the strike. If you already own the underlying asset that you have contracted to sell, your risk will be limited.
If you do not own the underlying asset the risk can be unlimited. Only experienced persons should contemplate writing uncovered options, then only after securing full detail of the applicable conditions and potential risk exposure.
Danish banks are required to categorise investment products offered to retail clients depending on the product’s complexity and risk as: green, yellow or red. For more information click here