Binary currency options

For whom it is intended:

• Particularly for legal entities 
  

Definition:

A binary currency option is a transaction wherein the seller provides to the buyer the right in advance to receive a payout at an agreed time if an agreed exchange rate will not be reached. The buyer of the option pays the option premium to obtain this right.

Binary currency options are generally used as one component of an option strategy or of a structured product.

Advantages of the product:

• The option’s buyer knows in advance the amount of the possible payout

Disadvantages of the product:

• The option’s buyer pays a premium to obtain this possibility

Variations of the product:

• European style option – Reaching of the agreed price is relevant only on a single given day (the expiry date).
• American style option – Reaching of the agreed price is monitored continually and is important regarding the agreed transaction right up to the expiry date.
• No-touch option – The underlying market price is monitored for only one agreed level.
• Double no-touch option – The underlying market price is monitored for two agreed levels which create a fluctuation band.

Conditions of concluding a transaction:

• Master Agreement for Financial Transactions
• Limit for treasury operations
• Minimum volume of EUR 100,000

For more information, please contact your bank advisor.