When an option contract has intrinsic value.
- A Call option is in-the-money when the strike price is below the current spot price of the underlying currency pair.
- A Put option is in-the-money when the strike price is above the current market price of the underlying currency pair.
At the Money (ATM)
When an option contract has no intrinsic value. Call or Put options are at-the-money when the strike price is the same as the current market price.
Out of the Money (OTM)
When an option contract has no intrinsic value.
- A Call option is out-of-the-money when the strike price is above the current market price of the underlying currency pair.
- A Put option is out-of-the-money when the strike price is below the current market price of the underlying currency pair.
Strike price difference from spot price
On the easy-forex options platform you enter an exact figure for the strike price (e.g. 1.2345) or you can enter an amount of percentage above or below the spot.
- = means the strike equals the spot
- +0 also means the strike equals the spot
- -1 means 1% less than the spot
- +2.3 means 2.3% higher than the spot.
Every option has an expiry date. American options can be exercised any time before or on the expiry date. This is the type of options you trade on optionsReasy.
A call option is the right to buy a currency pair at a specified strike price during a specified time period.For example, a call option for 100,000 GBPUSD with a strike price of 1.55 and an one month expiration gives the owner the right to buy 100,000 GBP in exchange for 155,000 USD any time within the next month.
A covered option is when you sell a call option along with buying a call with the same expiry date and at the same or larger amount. This means that your loss on the trade is limited and easily calculable (as it depends on the market rates rather than premium calculations). Similarly, if you sell a put option along with buying a put with the same expiry date and in the same or larger amount, it is considered a covered option. One appeal of selling a covered call is that you collect the premium but don’t risk potentially large losses.
Every option has an expiry date. European options can be exercised only on the pre-set expiry date, and not before nor after. optionsReasy allows you to trade American options.
Options can be exercised any time before a pre specified date, at which point they expire. The last day on which the option can be exercised is known as the expiry date. You can customise an option’s expiry date and choose how long it lasts when you are opening it.
The amount of money paid or received when the option or strategy is opened.
‘Premium At The Money’ shows how much money would be paid or received if the option is purchased or sold at the money, i.e. when the market price and strike price are equal. The premium will depend on the option’s implied volatility, interest rates, and time to expiry, among other factors.
A put option is the right to sell a currency pair from a specified strike price during a specified time period. For example, a put option for 100,000 EUR/USD with a strike price of 1.24 and an one week expiration gives the owner the right to sell 100,000 EUR in exchange for 124,000 USD any time within the next week.
The strike price is the price at which the option can be exercised. For call options (options to buy), the strike price is the ask price at which the currency pair can be bought, while for put options (options to sell) it is the bid price at which the currency pair can be sold.
Also known as “Extrinsic Value”, it is the difference between an option’s price and its intrinsic value. It is effectively the premium an investor would pay over an option’s current intrinsic value, based on the probability it will increase in value before expiry.