4.1.3 Settlement Method for Currency Options
The following table summarizes how currency options with different option and expiration styles are settled:
Table 4-23 Settlement Method for Currency Options
Option Style | Expiration Style | Exercise Method | Settlement on |
---|---|---|---|
Plain Vanilla |
American, Bermudan or European |
Manual or Auto |
For American expiration style: If manually exercised - Any day between earliest exercise date and Contract maturity date (both included), if manually exercised For auto exercise - On maturity, if the option is in-the-money For Bermudan expiration style: If manually exercised - On pre-defined exercise dates or on contract maturity date For auto exercise - On maturity, if the option is in the money For European expiration style: Only on Contract maturity date In all these cases, payment can be a fixed amount if such is opted for |
Binary |
American or European |
Manual or Auto |
For American expiration style: If manually exercised - Any day between earliest exercise date and Contract maturity date (both included), if manually exercised For auto exercise - On maturity, if the option is in-the-money. For European expiration style: Only on Contract maturity date Settlement payment is always a fixed amount |
Digital |
European only |
Manual or Auto |
Only on Contract maturity date. Settlement payment is always a fixed amount. |
No Touch |
European only |
Auto only |
Only on Contract maturity date. Settlement payment is always a fixed amount. |
Parent topic: OT Contract