How to Read Currency Options Tables

Currency is the most heavily trade commodity in the world. Any nation state can issue its own currency, however, the major currencies traded are EUR (euro), JPY (Japanese yen), GBP(great British pound), AUD (Australian dollar), CHF (Swiss franc) and CAD (Canadian dollar).

Instructions

1

Familiarize yourself with a currency option table. The price is on the left hand side of the table and the months run across the right. Calls and puts are generally separated with calls being on top and puts on the bottom.

2

Review the prices on the left hand side of the table. The prices will either be increasing or decreasing, depending on the direction of the currency.

3

Review the prices within the table. This is the cost to buy an options contract for the given month. If the current month is January, then a call (option to purchase) a contract for February will be less than the option to purchase in March. Likewise the contract to purchase in March will be less than the cost of a contract in April. This is due to time decay or "theta." The longer an option has to reach a certain price, the more valuable it is.

4

Note the information at the top of the table. This includes the contract size (both calls and puts), and the unit of US currency that the option price is quoted in. Usually this is in cents per unit of currency.

5

Work through an example. Say you are interested in buying futures for a unit of currency at a strike price of 100 in March. Look at the left hand side of the table for the strike price ($100) you want and then read across until you get to the March column. If the option price to buy a call is $.0050 per unit of currency and the contract is for 100,000 of the unit of currency, then the price of the contract is $.0050x100,000 or $500. This gives you the right to buy a futures contract for $500 at a strike price of 100.