Foreign Currency Option
/ˈfɔrɪn ˈkɜːrənsi ˈɑpʃən/
Definitions
- (n.) A financial derivative contract granting the right, but not the obligation, to buy or sell a specified amount of foreign currency at a predetermined price on or before a specified date.
The company purchased a foreign currency option to hedge against exchange rate fluctuations.
Forms
- foreign currency option
- foreign currency options
Related terms
See also
Commentary
Foreign currency options are commonly used in risk management to mitigate exposure to currency fluctuations; precise terms should clearly specify strike price, expiry, and underlying currency to avoid ambiguity.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.