Many people think of the stock market when they think of options. However, the foreign exchange market also offers the opportunity to trade these unique derivatives. Options give retail traders many opportunities to limit risk and increase profit. In finance, a foreign exchange option (commonly shortened to just FX option or currency option) is a derivative financial instrument that gives the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date.
DGCX offers Options on INR Futures:
Options on INR futures open the door to a host of versatile trading strategies; by using options alone, or in combination with INR futures, strategies can be found to cover multiple risk profiles and time horizons. Because the underlying instrument of the options contract is a futures contract, market participants can use options to protect themselves against volatile swings in INR futures prices, just as futures can be used to protect against volatile move in the price of the underlying INR spot market.
- The ability to hedge cash and futures positions against an adverse INR price direction without foregoing the benefits of favorable price movements
- The availability of an insurance hedge at many different levels of cost and degrees of protection
- A means for businesses and investors to act aggressively or conservatively on views about the direction and volatility of INR prices