Two types of forex option brokers are generally available: forex brokers who offer online forex options trading platforms and forex broker who only trade forex option via telephone orders placed through a dealing/brokerage office. A few forex option brokers offer online trading, as well as a dealing/brokerage service for those who prefer to trade through a live broker.
Forex option brokers can require different minimum trading account requirements. They may vary in size from a few thousand to fifty thousand dollars. Investors may also be required to trade forex option contracts that have minimum notional values (contract size) of $500,000. Not least, certain types can be opened and closed at any time. Other types lock you in until settlement. Depending on which forex option contract you choose, you may find yourself in a bind that you cannot exit. Before trading, investors need to speak to their forex option brokers regarding minimum trading account requirements, contract size minimums, and contract liquidity.
Brokers of forex options offer many different trading products for forex options. Forex option brokers offer a variety of forex trading options. We believe it is crucial that investors fully understand the risk characteristics of each one of these forex trading options.
Plain Vanilla Forex Options Broker – Plain vanilla options are standard put and option contracts that can be traded through an exchange. In the case of forex options trading, however, plain vanilla options would refer only to generic option contracts that can be traded through an OTC forex dealer or clearinghouse. Vanilla forex options is the purchase or sale of standard forex call option contracts or forex put option contracts.
Few forex brokers/dealers provide plain vanilla forex options online, with real-time streaming rates 24 hours a days. Many forex option brokers and banks offer forex options only via telephone. Vanilla forex options are available for major currencies and have excellent liquidity. It is easy to enter and exit the market either long or short.
Vanilla forex option contracts may be combined with spot forex contract and/or together to form a simple strategy like writing a covered-call or more complex forex trading strategies, such as butterflies, strangles and ratio spreads. Exotic options, which are also available in plain vanilla, are often used to create forex trading strategies.