Pricing Model For Forex Options
Being a global market leader in the OTC foreign exchange Options trading, Saxo Group provides you with access to liquidity and streaming prices. Option prices are shown on your trading platforms as dynamic Bid/Ask spreads. The options’ bid/ask spreads are of variable nature and depending on liquidity and conditions.
Samples of current live FX Vanilla Options spreads, updated every hour are available under 'Spreads'
The pricing model Saxo Capital Markets applies for FX Vanilla Options is based on an implied volatility surface for the Black-Scholes model. The price is calculated in Pip terms of the 2nd currency. Expiry up to 1 year.
Spreads are variable depending on available liquidity and market conditions. Prices are shown as dynamic bid/ask spreads.
The quoted FX Options spreads are for 30 day at-the-money options. Spreads for other strikes and maturities will vary.
See all FX options spreads with live updates
Saxo Capital Markets reserves the right to apply different spreads for notional amounts exceeding market standard or for customers requiring a specific level of service.
Maximum streaming notional amount is 25 million units of base currency; with a minimum ticket size of 10,000 on currency pairs; and for precious metals 10 oz (Gold) and 100 oz (Silver).
Notional amounts over maximum streaming amount are request for quote (RFQ).
Small trade sizes incur a 'Minimum Ticket fee' of USD10 or equivalent in another currency. A small trade that attracts a Minimum Ticket fee is any trade below the 'Ticket Fee Threshold' listed below.
|FX Vanilla Option||Ticket Fee Threshold|
|AUDSGD, EURCZK, EURHUF, EURPLN, EURTRY, EURUSD, GBPAUD, GBPCAD,
GBPCHF, GBPJPY, GBPUSD, USDCAD, USDCHF, USDHUF, USDILS, USDJPY,
USDMXN, USDPLN, USDSGD, USDTRY, USDZAR, USDRUB, EURRUB
|AUDJPY, AUDNZD, AUDUSD, CADJPY, CHFJPY, EURAUD, EURCAD,
EURCHF, EURGBP, EURJPY, EURNOK, EURNZD,
EURSEK, NZDJPY, NZDUSD, USDNOK, USDSEK
Touch Options Prices
When Trading Touch Options the holder (buyer) of an option (long) pays a premium and possibly receives a payout. The seller (writer) of an option (short) receives the premium and possibly has to pay the payout. The pricing model Saxo Capital Markets uses is similar to the one we apply to Vanilla Options (based on Black-Scholes model), with the price being expressed as a percentage of the payout in the first currency. Spreads vary depending on available liquidity and market conditions.
When Trading Touch Options you either pay the Premium (long positions) or receive it (short positions). No other commissions apply.
Amount is expressed as the potential payout. Maximum streaming notional amount is 25,000 units of base currency, with a minimum ticket size of 100 units. The price is expressed as a percentage of the payout in the first currency, with tradable tenors from 1 day to 12 months. Notional amounts over maximum streaming amount are request for quote (RFQ).
FX Options are available on live streaming bid and ask prices. Spreads vary depending on available liquidity and market conditions. The pricing displayed on your trading platform is dynamic bid/ask spreads, quoted as a percentage of the potential payout, reflecting the market's expectation of the probability that the spot rate will reach (or not reach) the trigger (or barrier) level prior to expiry.
The price of a Touch Option is called the Premium and is expressed as a percentage (%) of the potential payout. For instance, for a notional size of 1,000 and a price of 10%, the Premium will be 100 units of base currency and the Payout will be 1,000 units of base currency. For long positions you pay the premium and for short positions you receive the premium.
- You are looking for a potential payout of EUR 1,000 if EURUSD reaches 1.1500 within two weeks. The price of the One Touch Option is 20%.
- You the pay EUR 200 (EUR 1,000 x 20%) for the option.
- If the EURUSD spot price reaches 1.15000 before it expires you receive the pay-out of EUR 1,000
(net profit of EUR 800).
- If it doesn't reach the trigger level of 1.15000 your loss on the trade is the initial premium you paid for
the option (EUR 200).
A Touch Option is a type of option in which, unlike with traditional options, the payout can take only two possible outcomes: either you are paid the return in a predefined, fixed amount upon the occurrence of the event prior to expiry date, or you lose the amount invested in the option. Simply stated, a Touch Option is generally held until expiry in an “all or nothing” payout structure and based on a simple “yes” or “no” proposition: Will an underlying asset be above a certain price at a certain time?
The maximum loss is known when you trade Touch Option, and depending on whether it is a buy or sell position, the premium or the notional/payout (whichever represents the maximum loss) is reserved from your account in full when the Touch Option is dealt, i.e. the product cannot be traded on margin.
- If you buy a touch or no-touch option, then the maximum amount you can lose is the premium paid up-front (you stand to receive the notional/payout amount if the option “touches”). You must be able to pay this premium upfront, which is deducted from your account at the point of trade, and the market value of the touch option position cannot be used as leverage to support any other existing or new open positions from a margin perspective.
- If you sell a no-touch or touch option, then you receive the premium up-front (which you keep in entirety but may need to pay the notional/payout amount if the option “touches”). The premium is credited to your account at the point of trade, but the full notional/payout amount is reserved from the account and cannot be used over the touch option’s lifetime to support any other existing or new open positions from a margin perspective.
You should not engage in Touch Options trading unless you fully understand the basic aspects of such trading as well as its associated risks.
An option is categorised as a red product as it is considered an investment product with a high complexity and a high risk.
Saxo Capital Markets is required to categorise investment products offered to retail clients depending on the product’s complexity and risk as: green, yellow or red. Please refer to our "Product Risk Categorisation".