Forex Investment and Currency Trading

Positions
You, as an investor, have a choice of two fundamental option positions: You can be either “long” or “short” in an option. A long position means that you have purchased a contract without covering the position by the sale of a corresponding contract. A short position means that you have sold an option contract without having purchased an offsetting contract of the same series. “Long” and “short” positions may be held on both call and put options.
As the buyer (holder) of an option contract, you can:

allow the option to lapse without exercising it,
exercise the option,

Or

sell an option of the same [...]

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As with the price of any asset traded on a market, the price of an option is ultimately determined by supply and demand. There are, however, various factors which play an important role in the pricing of options.
Price of the underlying asset
The price of an option is closely linked to the price of its underlying asset on the spot market. Any change in the price of the underlying asset is generally reflected by a change in the option price. The extent of the change depends on the relationship between the price of the underlying asset and the strike price of [...]

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The option price (premium) is the amount that the buyer of an option has to pay to the writer of the option for his right to buy or sell the underlying asset. The option premium remains with the writer, regardless of whether or not the option buyer exercises his option right.
You as the buyer must usually pay the premium as soon as the contract has been executed. However, in the case of exchange-traded options on futures contracts, the “future-style method” has been adopted. Under this method, payment of the full premium is only due at the time the option is [...]

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The specifications of an option contract are illustrated by the following example of an exchange-traded option on shares:
Option type: Call
Underlying asset: Shares in Company X
Expiry date: October
Strike price: 150
Option type
There are two types of options: An option to buy the underlying asset is called a “call” option, while an option to sell is called a “put” option.
Underlying asset
The underlying asset is the asset or instrument to which the option right refers. Such assets may be individual shares or bonds, foreign currencies, or indices or contracts such as futures contract. One refers to the various types of options depending on their [...]

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