How to trade currency options in india

A currency future , also known as FX future , is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the purchase date. On NSE the price of a future contract is in terms of INR per unit of other currency e. g. US Dollars. Currency future contracts allow investors to hedge against foreign exchange risk. Currency Derivatives are available on four currency pairs viz. US Dollars (USD), Euro (EUR), Great Britain Pound (GBP) and Japanese Yen (JPY). Currency options are currently available on US Dollars.
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About Currency Derivatives.
NSE was the first exchange to have received an in-principle approval from SEBI for setting up currency derivative segment. The exchange launched its currency futures trading platform on 29th August, 2008. Currency futures on USD-INR were introduced for trading and subsequently the Indian rupee was allowed to trade against other currencies such as euro, pound sterling and the Japanese yen. Currency Options was introduced on October 29, 2010.
Currency Derivatives segment of NSE provides trading in derivative instruments like Currency Futures on 4 currency pairs, Currency Options on US Dollars and Interest Rate Futures on 10 Y GS 7 and 91 D T-Bill.
NSE's automated screen based trading, modern, fully computerised trading system designed to offer investors across the length and breadth of the country a safe and easy way to invest. The NSE trading system called 'National Exchange for Automated Trading' (NEAT) is a fully automated screen based trading system, which adopts the principle of an order driven market. Contract Specifications Internet Trading FAQs - Foreign Portfolio Investors.
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NSCCL carrries out the clearing and settlement of the trades executed in the equities and derivatives segments of the NSE. It operates a well-defined settlement cycle and there are no deviations or deferments from this cycle. It aggregates trades over a trading period, nets the positions to determine the liabilities of members and ensures movement of funds and securities to meet respective liabilities. More.
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Is it possible to trade forex options?
Yes. Options are available for trading in almost every type of investment that trades in a market. Most investors are familiar with stock or equity options, however options are available to the retail forex currency trader as well.
Currency Option Trading.
There are two types of options primarily available to retail forex traders for currency option trading. The first is the traditional call or put option.
The call gives the buyer the right to purchase a currency pair at a given exchange rate at some time in the future. The put option gives the buyer the right to sell a currency pair at a given exchange rate at some time in the future. Both the put and call options give investors a right to buy or sell, but there is no obligation. If the current exchange rate puts the options out of the money, then the options will expire worthless.
Alternatively, the other type of option available to retail forex traders for currency option trading is the single payment options trading (SPOT) option. SPOT options have a higher premium cost compared to traditional options, but they are easier to set and execute. A currency trader buys a SPOT option by inputing a desired scenario (ex. "I think EUR/USD will have an exchange rate above 1.5205 15 days from now"), and a premium will be quoted. If the buyer purchases this option, then the SPOT will automatically pay out should the scenario occur. Essentially, the option is automatically converted to cash.
Options are used by forex currency traders to make a profit or protect against a loss. It is also important to note that there is a wide variety of exotic options that can be used by professional forex traders, but most of these contracts are thinly traded because they are only offered over the counter. Because options contracts implement leverage, traders are able to profit from much smaller moves when using an options contract than in a traditional retail forex trade. When combining traditional positions with a forex option, hedging strategies can be used to minimize the risk of loss. Options strategies such as straddles, strangles and spreads are popular methods for limiting the potential of loss in a currency trade. (To learn more on this topic, see Exotic Options: A Getaway From Ordinary Trading .)
Not all retail forex brokers provide the opportunity for option trading within your accounts. Retail forex traders should be sure to research the broker they intend on using to determine whether everything that will be required is available. For forex traders who intend to trade forex options online, for either profit or risk management, having a broker that allows you to trade options alongside traditional positions is valuable. Alternatively, traders can open a separate account and buy options through a different broker.
Because of the risk of loss when writing options, most retail forex brokers do not allow traders to sell options contracts without high levels of capital for protection.

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Motilal Oswal Securities Ltd. (MOSL) Member of NSE, BSE & MSE - CIN no.: U65990MH1994PLC079418.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; motilaloswal. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai - 400 064. Tel No: 022 3080 1000. Registration Nos.: Motilal Oswal Securities Ltd. (MOSL): INZ000158836 (BSE/NSE/MSE);CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, MOWML is also a distributer of (ARN 87554) Mutual Funds PMS, Fixed Deposit, Bond, NCDs which is a group company of MOSL. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs and IPOs. *Commodities are offered through Motilal Oswal Commodities Broker Pvt. Ltd. which is a group company of MOSL. *Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. *Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. *Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Details of Compliance Officer: Name: Neeraj Agarwal, ID: namotilaloswal, Contact No.:022-30801085.
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INDIAN-CURRENCY-MARKET trading operations explained.
ON this article, we’ll be learning about the trading operations in indian currency market. For the beginners, I’ll try to keep things simple here & will not complicate this article with detailed core informations regarding currency market here. I’ll be sharing informations only at a level which is required for you to start trading currency market & once you spend some times trading in this market real-time, you’ll come to know the detailed features automatically over time & situations.
Firstly, I strongly recommend you to learn about indian stock market trading first before you try your hands on currency market as it helps you to understand better currency market operations. So, if you’ve missed my article on indian stock market trading operations. then pls click to read it here.
To understand currency market key functions, we need to understand the concept of cash market or equity market, future market, lot size, expiry cycle, exchanges, trading a/c, broker, commissions etc terms and if you’ve understood article written on indian share market, you must have understood all these concepts hence I’m not going for another detailed explanations of all these terms as I already did that in stock market article.
As the name suggests, In currency market, we trade only currencies – simple .
Today’s US DOLLAR rate is Rs 62/ per dollar means to buy 1 us dollar, you’ll have to pay Rs 62/.
In your analysis, if US DOLLAR rate will move upto Rs 65/ per dollar after 1 month, then you can buy US DOLLARS today & hold it for a month. Once you see the rate has reached at Rs 65/ as you expected, now you can sell those dollars & earn the profits. So the same way, we can make money using currency movement up & down like how we learnt making money using stocks & commodities price movement.
Like USDOLLAR example, in indian currency market, we can bet for 3 more different currencies & they are :
GBP ( great Britain pound ) , EURO , JPY ( Japanese yen ).
SO, We have four currencies to trade in india against INDIAN RUPEES & they are shown on your trading screen like this :
So it looks like some currency “pairs” , isn’t it ? Yes>> in currency market, we trade currency in “pairs ” like USDINR or GBPINR etc.
Lets have a look how it really looks like on the trading screen in this video:
1) At present, currency futures are traded on platforms offered by exchanges like the NSE, Bombay Stock Exchange (BSE), MCX-SX, and United Stock Exchange (USE).
2) Currency trading hour is 9.00 am to 5.00 pm.
3) There is no cash or equity form like we use in indian stock market, for trading this currency market. So you need to open a trading account only with a broker & no need to open a demat account.
4) we can only trade future & option segments in currency market. So as you know, in future trading, there are special features like:
a) LOT SIZE : There are fixed lot sizes defined by exchange. You’ll have to trade in minimum 1000 qty in respective currency pairs & this min qty requirement is also called lot size means, here 1 lot = 1000qty. So, if USDINR price is rs 63/ now, you’ll have to trade in minimum 1 lot (which is 1000usd) hence you’ll be buying minimum 1000usd or multiple of that to bet on this currency pair movement. Same condition is applicable for other currency pairs to trade.
b) MARGIN FACILITY : W e’ll be trading on margin hence no need to pay the full amount for what we trade. When you buy 1 lot(1000qty) of usdinr future contract at rs 63/, you’re buying amount is Rs 63,000/. As we are trading future, so we get a margin facility of paying 3% of total investment & enjoy the gains on total buying amount. So to buy 1 lot of usdinr , we just need to pay rs 1900/ instead of paying rs 63,000/.
c) EXPIRY DEADLINE : There will be expiry deadlines in all the future contracts & all the contracts will expire on last working day of respective month’s contract.
d) LONG / SHORT : We can long / short the currencies & hold the positions in both way till expiry.
e) Regarding option trading, once you are master enough trading stock market options, you’re ready enough to trade currency options too as option trading in all the segments are same. As i’ve covered option trading in depth in stock market operation tutorial hence i’m not repeating the same here.
I’ve added a quick video below to show you how future trading takes place realtime :
As a starter, you should open a trading account first with the help of a broker. Choose you broker carefully as if he misguides you, you can face lot of problems in your initial days. So choose a good branded broker rather than going for some random brokers. I’ll suggest you to open your accounts under a broker’s branch office & not under a franchisee shop of that broker. If you can open your account in the broker’s main branch office, nothing better than that as you’ll get the best service from there.
What we discussed above, are the basic understandings of indian currency market trading & Once you’re tuned up with the basic ideas we discussed here, i’ll suggest you to read the article regarding TECHNICAL ANALYSIS . As you’ll have to learn technical analysis next, to know which currency to trade & where to buy/sell.
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About the author.
RAJIB is a full-time stocks, commodity & Forex trader and Owner of FINANCIALHUBINDIA. His trading career began in 2008 and has followed a path similar to many traders. He tried nearly every indicator & it wasn't until he started using raw price action in 2010 that he became consistently profitable. Using this site, he is sharing his knowledge & experience based on price action trading which can be used & traded in any form of markets.
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hello….. can any of you actually explain profit and loss using a trading example. All the sites are full of same shit…… not a rocket science to understand lots and lot size. but how does it all work. how and when do i book a profit or calculate my losses……