Forex (fx) is an acronym of Foreign Exchange. Forex Trading is when currencies from different countries are traded against each other.

In traditional forex trading (or currency trading) actual currencies are bought and sold. However, in forex options trading, the buyer purchases the option not the currency i.e. they are entering into a contract to buy currencies at a fixed price within a pre-determined time frame.

A forex option is a type of binary option which means both outcomes are realized when the contract is created. If the potential gain and the potential loss from the trade are known from the onset, then it makes the trade totally transparent.

In a binary option trade there are only two possible outcomes: or the option expires in-the-money and the buyer receives a fixed amount of cash; or the option expires out-of-the-money and the buyer receives nothing. However, if forex option trading is carried out on the anyoption™ platform, an option expires out-of-the-money, then a buyer receives a 15% back of his initial online investment.

In forex option trading the underlying asset being traded is a currency pair e.g. EUR/GBP, AUD/USD, USD/JPY, GBP/JPY plus many more.

When placing an online investment, the result is independent of the magnitude by which the price change of the currencies relative to one another. For example, a buyer may purchase a call option for ?100 on USD/JPY currently at 97.1563, with an expiry time of the end of the week, for a return of 70%.

If at the end of the week, the currency pair ends at 97.1564 then the option has expired in-the-money and the owner will receive ?170. Even though the stock has only moved 0.001 points, they will still receive the full 70% payout. This makes forex option trading an attractive method of trading for many new investors.

Once an exclusive industry, forex option trading is now available to everyone. Since all risks are known from the onset and due to the comfort of online trading, many buyers are turning to online investments, specifically option trading, to purchase their trades.