Currency option
(redirected from Foreign Currency Option Contract)Currency option
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved