Forex Options Rates & Conditions

Target Bid/Ask Spreads and Auto execution
A variable bid / ask spread and auto execution limit pricing model is used for currency options. This means current, two-way, competitive market consistent pricing is always provided. As both the bid and ask price are quoted, the current spread is always visible to the client when requesting an option price.

Ticket Fees
For trades below the Ticket Fee Threshold, a small ticket fee of USD 10 is added to the trade to cover administration costs.

Forex Options Margin Requirements
Margin requirements for Forex Option positions take into account changes in:

  » Volatility
  » Spot price of the underlying asset
  » Open positions (that effectively reduce the risk associated with your Options positions)

The margins for Forex Options are also subject to a volatility factor that may increase the margin requirements. This factor will be more prominent the longer the expiry date for the Forex Option.

Margin Calculations
Margin requirements for Forex Options consist of two components:

  » Delta Margin which is related to the exposure due to changes in the underlying Forex spot rate
  » Vega Margin which is related to changes in the volatility of the underlying spot Forex cross

The calculation for the margin requirement of a Forex Option position is:

MARGIN REQUIRED = DELTA MARGIN + VEGA MARGIN

Across all Forex products (including options), the margin rates for the first EUR 50,000 of investment collateral are 50% of the normal margin rates.

Exercise procedure
Forex Options that are "in the money" are automatically exercised at 10:00 New York time (New York cut) on the day of expiry where they are converted to a spot position. This spot position is subject to the usual profit/loss if the spot price moves from the exercise price. If you already have an offsetting position at the time of exercise, the exercised position will be netted out on the following day.