Currency option

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Currency option

An option to buy or sell a foreign currency.

Currency Option

An option contract in which the underlying asset is a foreign currency. The option gives the holder the right but not the obligation to buy (for a call) or sell (for a put) a set amount of the currency at a certain exchange rate on or before the expiration date. They are largely used when international corporations wish to hedge against the possibility of adverse movements in foreign exchange rates.
References in periodicals archive ?
The petitioner, Michael Napoliello, entered into two pairs of offsetting long and short foreign currency option contracts held by an LLC of which he was the sole member.
There is no indication that foreign currency option contracts were contemplated for inclusion in the statutory definition of a forward currency contract in [section] 1256(g)(2)(A).

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