Charles J_ Taylor#6

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How do forex options provide flexible hedging and speculation tools?

Forex options give the right, but not obligation, to buy or sell at a set price. Institutions use options to protect downside while retaining upside potential. Retail traders access “vanilla” options or structured products. Benefits: asymmetric protection—limited loss (premium), unlimited gain. Risks: high costs, complexity, and time decay. Example: a U.S. importer buying EUR call options to hedge payment risk. Options demonstrate forex’s flexibility—traders can insure, speculate, or combine both in structured strategies.