P R O D U C T T R A D I N G R A T E S & C O N D I T I O N S F O R E X O P T I O N S
PRODUCT TRADING RATES & CONDITIONS FOREX OPTIONS Bid/Ask Spreads and Autoexecution The Bank is a global leader in FX Options trading. We are able to provide streaming prices for most of the popular currency pairs with larger strike ranges and longer maturities than others. This means clients have direct access to trade FX Options on live prices without dealer intervention. Except on low-value trades, there are no commissions on trading FX Options, only the difference in the spread. Since the Bank always quotes both the bid and ask price, the current spread is always visible to the client. The spreads on FX Options may change from option to option depending on several factors such as time to maturity and the volatility of the underlying FX spot rate. The list of indicative spreads can be found in the platform under Trading Conditions. Forex Options Margin Requirements Margin requirements for Forex Option positions take into account changes in: volatility spot price of the underlying asset open positions (that effectively reduce the risk associated with your Options positions). The margins for Forex Options are also subject to a volatility factor that may increase the margin requirements. This factor will be more prominent the longer the expiry date for the Forex Option. Margin Calculation Overview The margin requirement for a Forex Option position consists of two components: Delta Margin which is related to the exposure to changes in the underlying Forex spot rate andvegamargin which is related to changes to the exposure in the volatility of the underlying Forex cross. The calculation for the margin requirement of a Forex Option position s: MARGIN REQUIRED = DELTA MARGIN + VEGA MARGIN Across all Forex products, including options, the margin rates for the first EUR 50,000 of investment collateral are 50% of the normal margin rates.
PRODUCT TRADING RATES & CONDITIONS FOREX OPTIONS Exercise Procedure Forex Options that are 'in the money' are automatically exercised at 10:00 New York time (New York cut) on the day of expiry where they are converted to a spot position. This spot position is subject to the usual profit/loss if the spot price moves from the exercise price. If you already have an offsetting position at the time of exercise, the exercised position will be netted out on the following day. Ticket Fees for Low-Value Trades For trades below the Ticket Fee Threshold, a ticket fee of USD 10 is added to the trade to cover administration costs. The Ticket Fee Threshold per currency pair is the same as for FX Spot, and can be seen in the FOREX-Rates & Conditions document.
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