Currency options and currency futures options have different values because
A) the payoff on the currency option depends on the exchange rate at maturity,while the currency futures option's payoff depends on the exchange rate futures price at maturity.
B) the payoff on the currency option depends on the exchange rate futures price at maturity,while the currency futures option's payoff depends on the exchange rate at maturity.
C) currency options are American while currency futures options are European.
D) currency futures options are American while currency options are European.
E) currency options are quoted in U.S.dollars while currency futures options are quoted in the foreign currency.

Question

Quizplus · Accepted Answer

The payoff on a currency option depends on the exchange rate at maturity, while the payoff on a currency futures option depends on the exchange rate futures price at maturity, which results in different values for the two types of options.

Currency Options and Currency Futures Options Have Different Values Because