Economics Options And Futures Questions
A currency option is a financial derivative that gives the holder the right, but not the obligation, to buy or sell a specific amount of a currency at a predetermined exchange rate within a specified period of time. It provides the holder with the flexibility to either buy (call option) or sell (put option) the currency at the agreed-upon rate, known as the strike price, in the future. Currency options are commonly used by individuals and businesses to hedge against potential currency exchange rate fluctuations or to speculate on future currency movements.