Learning Center

At the money

At the money is a term used in options trading, used to define the proximity of an underlying asset’s price to the figure at which it can be bought or sold (known as its strike price).

Barriers

Barriers are used in derivatives to either knock-in or knock-out contracts. Knock-in is a barrier that creates a new contract. Knock-out is a barrier that cancels a contract.

Basis Point

A basis point is a unit used in trading to describe movements in interest rates or other percentages. It is equal to one hundredth of one percent, or 0.01%.

Converting from

Defines the currency you are looking to sell.

Derivative

A derivative is a financial product that enables traders to speculate on the price movement of assets without purchasing the assets themselves

Expiry

The last date an option can be exercised. If the option is exercised the currencies will be delivered/settled 2 business days later.

FCA

The FCA, or Financial Conduct Authority, is the United Kingdom’s financial regulatory body.

Foreign Exchange

Foreign Exchange is how market participants convert one currency to another. It can variously be referred to as Forex, FX, or currencies.

Forward Contract

The exchange of one currency for another currency at a specified exchange rate, for a specified amount, at a specified date in the future.

Forward Points

The difference, in basis points terms, between the spot rate and the forward rate.

Forward Rate

The rate at which a forward contract can be booked.

Call

A call is a type of option that gives the purchaser the right, but not the obligation, to buy a certain market at a certain price (called the strike price) before its expiry date.

Hedge

A hedge is an investment or trade designed to reduce your existing exposure to risk. The process of reducing risk via investments is called 'hedging’.

Initial Margin

The initial deposit a client must post to protect our FX service providers from the risk of default.

Interest Rates

The amount that a lender charges to a borrower for the loan of an asset, usually expressed as a percentage of the amount borrowed.

In the Money

An options contract is in the money if it has intrinsic value. For example, a call option is in the money when the spot price is greater than the strike price of the option.

Margin Call Agreement

A legal agreement defining the credit terms between our FX service providers and its client. The agreement covers the offer of a trading line and an initial or variation margin levels

NYC

An Acronym for New York Cut. This is the standardised time for OTC options expiries. 10am New York time.

Options

An option is a financial instrument that offers you the right – but not the obligation – to buy or sell an asset when its price moves beyond a certain price with a set time period.

Order

An order is a request sent to a broker or trading platform to make a trade on a financial instrument.

Market

Markets are a medium through which assets are traded, with their value determined by supply and demand.

Out of the Money

Out of the money is the point at which it is an option contract will not be executed as it has no intrinsic value. Exercising an out of the money option will result in a trading loss.

Participating Forward

A foreign exchange contract that allows the holder to benefit from favorable exchange rate movements for a predefined percentage of the total amount in exchange for a less favorable forward rate than an outright forward.

Premium

The initial cost to purchase a vanilla option.

Profit and Loss

Profit and loss refer to the financial returns or losses from any business enterprise or trade.

OTC

OTC stands for over the counter and refers to a trade that is not made on a formal exchange.

Puts

Puts are a variety of option that give the purchaser the right, but not the obligation, to sell an asset at a certain price before the option expires.

Quote

The quote is the price at which an asset was last traded, or the price at which it can currently be bought or sold.

Risks

Risks are the ways in which an investment can end up losing you money.

Settlement

The date on which the exchange of assets takes place.

Settlement Date

The date on which trade settlement occurs.

Spot Rate

The exchange today of one currency for another currency at a specified exchange rate and specified amount.

Spread

Spread is the difference in price between the buy (bid) and sell (offer) prices quoted for an asset.

Strike

In options trading, the strike is the price at which a contract can be exercised, and the price at which the underlying asset will be bought or sold. It is also known as the strike price.

To

Defines the currency you are looking to receive

Vanilla

A term used for generic, non-exotic options with no barriers associated with them.

Variation Margin

The money which must be deposited with our FX service providers to ensure against default in the event of your contract losing value during the contract’s life.

Volatility

A market’s volatility is its likelihood of making major, unforeseen short-term price movements at any given time.

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