Overview: A Foreign Currency Option is like an insurance policy. It is a "hedging tool" that lets you exchange one currency for another on a given date, at a prearranged exchange rate (strike price), without obliging you to do so. Like forward contracts, foreign currency options eliminate the spot market risk for future transactions. This article provides an introduction to Foreign Currency Option.
Tags: FCO, Foreign Currency Option, Exporters, Importers
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Source: TDcommercialbanking
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