1.4 Currency Options

This topic describes the currency options in OT module.

A currency option gives the holder the right, but not the obligation, to buy a specific currency against another specific currency at a pre-agreed rate on or before a pre-specified future date.

Apart from plain vanilla currency options, the OT module of Oracle Banking Treasury Management also supports exotics in the form of binary, digital, and no-touch options. Barrier options – options that get knocked in or knocked out under pre-specified conditions – are also supported.

Currency options can have either of the following expiration styles:

• Physically Settled, where the counterparties are obliged to enter into a spot foreign exchange deal on exercise of the swaption
• Cash Settled, where the counterparties are expected to exchange money on exercise of the option