ABSTRACT
Currency futures and options are a recent development, futures having emerged in the early 1970s and options in the early 1980s, each in response to the growth of international trade and the increase in exchange rate volatility. Currency futures are contracts specifying the obligation to buy or sell standard amounts of currencies at a future date at current specified prices. Contracts are traded in organised markets with specific physical locations. A call option confers on option buyers the right to buy and on option sellers the obligation to sell currencies on or until a future date at a current specified price. The contracts have standardised maximum maturities and are guaranteed by and cleared through a centralised clearing corporation. Currency options are contracts specifying the right to buy or sell currencies on or until a future date at current specified prices. Futures contracts enable market operators to profit from or hedge against exchange rate movements.
