A currency option gives the buyer the right, but not the obligation to buy or sell a specific currency at a specific exchange rate on or before a psecific date.

Question

Quizplus · Accepted Answer

A currency option is a hedging instrument that enables firms to insure against the downside risk of transaction exposure resulting from adverse exchange rate movements, while enabling them to capture any upside gains from favourable movements.

A Currency Option Gives the Buyer the Right, but Not