Saxo’s FX Vanilla option offering provides the possibility to both buy and sell European style options, giving clients the opportunity to express a directional view in two different ways. FX options not only enable clients to express a directional trading view but also offer more alternatives in relation to controlling risk, in addition to a traditional stop loss order.
The holder of an option (long) pays a premium for the right to exercise the option at a profit, or let the option expire with no further obligation. The writer of an option (short) receives the premium and assumes the possible liability of having to pay the difference between the strike price and market price at maturity.
The pricing model Saxo applies for FX Vanilla options is based on the Black-Scholes model. The price is calculated in pip terms of the 2nd currency. Pricing is available for options with maturities from 1 day to 12 months, providing you with maximum flexibility to implement your trading strategies and market views.
|Level 1||Level 2||Level 3|
|Volume USDm (monthly) required||0 - 50||50 - 100||> 100|
FX Option Volume-based pricing serves low-volume traders equally as well as it does high-volume traders. We charge a standard ‘Classic’ spread, with the benefit of improved spreads for larger cumulative trading volume.
- If you trade over 50 million USD, you are eligible for Platinum spreads
- If you trade over 100 million USD, you are eligible for VIP spreads
The spread is defined as the distance between the bid/ask price. Spreads may vary depending on the life of the option and the currency pairs.
Saxo reserves the right to apply different spreads for notional amounts exceeding market standard and/or for client requiring a specific level of service.
Trades cannot be executed below the minimum trade size. Minimum trade sizes are as follows:
XAUUSD: 10 Oz
XAGUSD: 100 Oz
NOK/SEK: 50,000 NOK
All others: 10,000 units of base currency
Request for Quote (RFQ) on amounts above the maximum streaming amount (currently 25,000,000 units of base currency) will be executed manually by the FX trading desk.
Note. Maximum streaming amounts are subject to change without prior notice.
Small trade sizes incur a minimum ticket fee of 10 USD. A small trade size is any trade below the commission threshold which for most currency pairs is 50,000 units of base currency, however variations occur. Full details can be found here.
Saxo’s FX Touch option offering provides the possibility to both buy and sell One Touch and No Touch options, giving clients the opportunity to express a directional view in two different ways.
The holder of an option (long) pays a premium and possibly receives a payout. The writer of an option (short) receives the premium and possibly has to pay the payout. The pricing model that Saxo uses is similar to the one applied to Vanilla options (based on Black-Scholes model), with the price being expressed as a percentage of the potential payout. Spreads may vary depending on the life of the option and the currency pair.
The maximum streaming amount is 25,000 units of base currency, with a minimum ticket size of 100 units. Notional amounts above the maximum streaming amount are equest for Quote (RFQ) basis. Tradeable tenors from 1 day to 12 months.
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 touches 1.1500 within two weeks. The premium of the One Touch option is 20%.
You pay EUR 200 (EUR 1,000 x 20%) for the option.
If the EURUSD spot price touches 1.1500 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 1.1500 your loss on the trade is the initial premium you paid for the option (EUR 200).
At Saxo Capital Markets, FX Touch Options can be either bought or sold.
|Trading Long (buying)||When buying an option, you have to pay the full Premium in cash. The Premium is subtracted from the Cash Balance (initially shown as 'Transactions not booked'. At the end of the day it is subtracted from the Cash Balance).|
The current value (positive) of the bought position is displayed in 'Non-margin positions' and subtracted from 'Not available as margin collateral'. Thus, you cannot use the value of Touch Options for margin collateral.
|When selling (writing) an option, you need to have the cash sufficient for the potential payout in the event of an exercise (One Touch) or expiry (No Touch).The Premium is added to the Cash Balance (initially shown as 'Transactions not booked'. At the end of the day it is added to the Cash balance).|
The current value (negative) of the sold position is displayed in 'Non-margin positions'. In order to reserve the full potential payout the difference between the current value and the potential payout is subtracted from 'Not available as margin collateral'. Hence, your full potential loss from the option payout is thus not available for margin collateral.