foreign currency option

Foreign currency option

An option that conveys the right (but not the obligation) to buy or sell a specified amount of foreign currency at a specified price within a specified time period.

Foreign Currency Option

An option contract giving the holder the right, but not the obligation, to buy (for a call) or sell (for a put) a futures contract on a certain currency with a given exchange rate on or before the expiration date (depending on the type of option). A foreign currency option effectively gives one the option to lock in an exchange rate on the currency in question if it moves in a favorable direction, while letting the option expire, worthless, if the currency does not move in the desired direction. This helps hedge an investor's foreign exchange risk.

foreign currency option

The right to buy (a call option) or to sell (a put option) a foreign currency futures contract at a fixed price until a specified date.
References in periodicals archive ?
Since settlement is not required with options, a foreign currency option would therefore not meet the definition of a foreign currency contract.
The difference is that the foreign currency option is limited by time, as it does not close the position when the stop-loss price is hit yet still provides financial protection for you.
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.
During the fourth quarter of 2002, the company recorded an unrealized loss on derivative instruments relating to foreign currency option contracts expiring in 2003 and entered into prior to year-end 2002.
31) When the district court ruled that Dunn's foreign currency option trades were subject to CFTC regulation, Dunn brought an interlocutory appeal to the Second Circuit.
dollar receivables or payables is a type of transaction risk which can be hedged using forward foreign exchange or foreign currency option contracts.
1256 and, thus, a foreign currency option could be a foreign currency contract.
Thus an unrealized loss existing on the date that a foreign currency option was transferred to a charity was disallowed.
K, pound exchange rate and decides to manage that risk by purchasing a foreign currency option directly from a U.
Both cases involved foreign currency option spreads that the IRS deemed tax-avoidance shams.
Notice 2003-81 offsetting foreign currency option contracts: A party claims a loss on the assignment of a Sec.
Before joining Vie, he was Senior Vice President and General Counsel of the Philadelphia Stock Exchange, advising the Exchange and its member firms of all rules and regulations regarding the Exchange's stock, stock option, index option, and foreign currency option market segments.

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