Currency option

(redirected from Foreign Currency Option Contract)

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.

Mentioned in ?

References in periodicals archive ?

Moreover, Field Service Advice (FSA) 200025020 (issued prior to Notice 200381, which was modified and supplemented by Notice 2007-71) provided the following reasoning: Although the definition of a foreign currency contract provided in 1256(g)(2) may be read to include a foreign currency option contract, the legislative history of the Technical Corrections Act of 1982, which amended 1256 to include foreign currency contracts, indicates that the Congress intended to extend [section] 1256 treatment only to foreign currency forward contracts that are traded on the interbank market.

Treatment of foreign currency option gains

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.

Ninth Circuit affirms tax courts jurisdiction to redetermine partnership deficiency

dollar receivables or payables is a type of transaction risk which can be hedged using forward foreign exchange or foreign currency option contracts. A forward contract is a mutually binding agreement between two parties to exchange a certain amount of one currency for a specific amount of another currency at a date or range of dates in the future.

Identifying foreign exchange risks in international trade

Financial browser ?

Full browser ?

CITE

Site: Follow: Share:

Open / Close