A Primer on Options
is the right to buy or sell the underlying currency at a specific price for a specified period of time. You can purchase an option or write an option. For speculative purposes, purchasing is most common.
The right to buy is a call.
You have the right to call
the position away from someone holding the spot equivalent.
The right to sell is a put.
You have the right to put
a spot position to someone.
You purchase a call if you believe the currency price is headed up.
You purchase a put if you believe the currency price is headed down. An option is a contract between a buyer and a seller; the seller is termed the writer,
is the purchaser. The writer captures the cost the purchaser has paid for the option. Writing is generally a means to gain income off a long-term position you are willing to close if the option is called away from you or put to you.
By Michael Duane Archer