Foreign Exchange Option
/ˈfɒrɪn ɪksˈtʃeɪndʒ ˈɒpʃən/
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 rate on or before a set date.
The company used a foreign exchange option to hedge against currency fluctuations in its international operations.
Forms
- foreign exchange option
- foreign exchange options
Related terms
See also
Commentary
Foreign exchange options are typically used in risk management to mitigate exposure to currency volatility; precise terms and conditions should be clearly defined in the contract.
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.