FX Options

FX options are financial contracts that give the buyer the right, but not the obligation, to buy or sell a specific amount of one currency for another at a predetermined exchange rate on or before a set date. They are used by businesses and investors to manage currency risk or speculate on currency movements. If the exchange rate moves favorably, the option can be exercised for a profit; if not, the buyer can choose not to use it, limiting potential losses to the premium paid for the option.