Currency option business

Risks of currency fluctuations can be hedged through a currency option transaction . When buying currency options , the buyer acquires the right, but not the obligation, to buy or sell a currency at a specific exchange rate on a specific date. The buyer pays the seller a premium for this right when the transaction is concluded . In contrast to the seller, the buyer of an option does not enter into a firm commitment and the risk is limited to the loss of the option premium. As with regular options is called a call option or put option depending on whether the option buyer the right to buy or sell.