Notification to the option writer requiring that person to fulfill their contractual obligation to buy or sell the currency.

The first three digits of an exchange rate e.g. USD 1.24 per EUR or USD 1.82 against GBP.

The foreign exchange rate or currency futures price at which a strategy neither makes nor loses money.

An option strategy designed to allow the trader to participate, with limited risk and limited return, in the rise of a currency.

A combination of a bull spread and a bear spread; the strategy normally gives a maximum return and   maximum loss.

A strategy involving the buying and selling of options with different expiration dates.

An option which gives the holder the right to buy, and the writer the obligation to sell, a predetermined   amount of a currency to a predetermined date at a predetermined exchange rate.

An organization which matches and guarantees option trades on exchange.

A strategy involving the buying of a call and put option with different strikes but with the same expiration dates.

A riskless strategy involving the buying of a currency and the simultaneous buying of a put and writing of a call option, both normally European style and of the same strikes and expiration.

A strategy involving the buying of a currency and the writing of a call option, or the selling of a currency and the writing of a put option.

The ratio by which the price of the option moves relative to the underlying spot or futures contract.

A trade involving the adjustment of the long or short options positions by the ratio of the delta.

Financial instrument, such as futures and options, which derive their value from underlying securities   including bonds, bills, currencies and equities.

Term used to describe an option trading for less than its intrinsic value.

For covered calls, the ‘cushion’ against loss provided by the option premium received.

Process by which the holder of an option elects to take delivery of (call) or deliver (put) a currency   according to the contract terms.

The price at which the option holder has the right to buy or sell the underlying currency or currency futures contract.

In the exchange-traded options market, the time frame in which listed option run.

In the over-the counter (OTC) market the latest time an option may be exercised is usually 3pm London   time, 10am New York time or 3pm Tokyo time, on that particular day.

Usually refers to the value of an option premium according to a mathematical model.

The rate at which a foreign exchange contract is struck today for settlement at a specified future date.

A contract giving the obligation to buy or sell an asset at a set date in the future.

An order left with a dealer to buy or sell at a fixed price. It holds until it is cancelled.

The ratio of options to buy or sell against spot position in order to create a riskless hedge.

An option that has intrinsic value. For a call, the strike is below the spot rate. For a put, the strike is above the spot rate.

Facility whereby a small margin deposit can control a much greater total contract value, a mechanism   which determines the ability to make extraordinary profits at the same time as keeping the risk capital to a minimum.

An order given which has restrictions upon its execution. The client specifies a price and the order can be executed only if the market reaches that price.

Initial margin is the amount required to be put up as collateral by the option writer to the clearing corporation. It is equivalent to a performance bond. Variation or maintenance margin is further cover required, should the option position move against the writer.

Daily adjustment of an account to reflect accrued profits and losses.

Strategy involving the buying and the writing of options with different strikes but with the same expiration   dares. It can be put on for a credit or debit to take advantage of a directional market move.

A short option with no intrinsic value. For a call, the strike is above the spot rate and for a put the strike is below the spot rate.

Where the execution of one trade automatically cancels a previous order.

Customized option market usually traded directly between banks and their customers or with other banks.

0.0001 of a unit; for instance, if the USD/EUR is 1.2420, then 1.2419 is one pip lower. Also sometimes referred to as a point.

The amount of money paid by a buyer and received by a seller for an option.

An option giving the holder the right to sell and the writer the obligation to buy, a predetermined amount of currency to a predetermined exchange rate.

0.0001 of a unit; for instance, if the USD/EUR is 1.2420, then 1.2419 is one point lower. Also sometimes   referred to as a pip.

Strategy involving the sale of an amount of call options in excess of the amount of a long call option held,   or the sale of put options in excess of the amount of a long put option position held.

Strategy involving the sale of a call option in excess of the amount of a long currency position held, or the   sale of put options in excess of the amount of a short currency position held.

A price level at which you would expect selling to take place due to technical analysis. The resistance level of one currency is the support level for the other.

Riskless trade involving the selling of a currency and the simultaneous buying of a currency call and   writing of a currency put option, both normally European style and of the same strikes and expiration.

Two business days following exercise. It is the day on which the currencies involved in the option   transaction are exchanged.

Spot means that the settlement date of a deal is two business days forward.

Strategy involving the buying of call and put options with the same strikes and maturity.

An order to buy or sell when a particular price is reached, either above or below the price that prevailed when the order was given.

Strategy involving the buying of a call option and put option with different strikes but with the same   expiration dates.

The price at which the option holder has the right to buy or sell the underlying currency or currency futures contract.

An agreement between two parties to exchange a series of future payments. In a currency swap, the   exchange of payments (cash flow) are in two currencies, one of which is often US Dollars.

The amount by which an option premium exceeds its intrinsic or in-the-money value.