Currency options give their buyer the right,but not the obligation,to deliver or take delivery of a foreign currency or currency futures contract.

Question

Quizplus · Accepted Answer

Currency options are derivatives that give their buyer the right, but not the obligation to deliver or take delivery of a foreign currency or currency futures contract. The buyer of a currency option pays a premium to the seller for this right, and if they choose to exercise the option, the seller must fulfill their obligation. However, if the buyer decides not to exercise the option, they simply forfeit the premium they paid for the option.

Currency Options Give Their Buyer the Right,but Not the Obligation,to