Soon to be released globally, FX Options are the newest instrument on the IQ option platform. The broker has prepared yet another exciting instrument for traders that binds the advantages of Forex trading with the appeal of the options trading.
Even better, this new instrument will also be offered to EEA customers, enabling them to trade forex short term with option type instrument. The main idea behind the FX options is to make it simple to use the trading platform, while at the same time leaving the control over the risk level that is acceptable to the customer. Please see the video below for more detail!
Some of the advantages of FX Options are
- unlimited potential return since it depends on the asset price change
- In case of loss, investors do not lose all the invested capital per position, but less
- offers risk selection by defining the amount to trade and also choosing the strike price and thereby the desired return upon the expiry
- easier to place trades than CFDs* since one does not have to worry about pips, leverage, margins etc
The logic behind the payouts is simple. The customer needs to define the price at which they will exchange one currency for another, in some future time point. The payout changes depending how much difference is between that price and the starting price, meaning, as always, that the larger the difference, larger the risk, but also the potential payout. This gives the control of the FX Option’s risk level profile to the customer. Please note, that the market risk and all other risks still exist with FX options, however, in this short time frame they are traded, the customer can select the level of it they are ready to take.
FX Options are available in 14 currencies. Expiry times are 1 minute or 5 minutes. Also, customer cannot lose more than they have invested.
Recently, we have also seen easyMarkets launch easyTrade, with similar concept. However, the IQ option implementation seems to be much more polished and user friendly.
All trading carries risk of loosing your invested capital. *CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89 % of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.