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[fastbusiness]

Could anyone, please, check the text below and tell me what's wrong with this.

If I buy Call option that means that I will profit if price goes above my strike price. Otherwise, if price goes below my strike price I will not lose anything, except premium that I paid. But virtually I will make no profit until spot rate pass the premium line. Example: Buy Call option of gbp/jpj - 100.000 units at 223.00 and premium that I pay is, let's say, 1.00 so that means that I'll start making profit once price has reached the 224.00 rate and continues to go up. The same thing applies for short Call.

About Put options. If I buy Put option that means that if price goes above my strike price I will have a loss and it is not limited, as long as it continues in that direction I'm losing money. But if price goes below my strike price (unlimited number of pips) I will have absolutely no loss. Right? And I'll get premium. Am I'm missing something here? Same thing applies for sell Put.

Example: I Buy Put option with strike price at 223.00 of gbp/jpj - 100.000 units, that means that if spot price goes to 224.00 I will have a 100 pip loss or approximately $865 of loss. But if price goes down to 220.00 I will not get any profit (there is no profit if price goes below strike price, and I'll get a premium).

I expect some corrections here... if needed.

[volpotten]

I think you are a bit confused.
You have unlimited potential loss if you write (sell) a Call or a Put option.

You have a loss limited to the premium and potentially unlimited profit if you buy a Call (or Put) option.

[jodyong]

Where can we trade fx options?

[fastbusiness]

Now I really am confused.fficeffice" />>>
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I'll give an example here and you tell me what happens after:>>
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Current fx spot rate for gbp/jpj is, let's say, 223.00. I buy call (100.000 units) and set my strike price at 223.00. Option lasts for 1 month. I pay premium of, let's say 1.00. So currently, what I see is that after one month from the date I purchased an option I will be able to buy back 100.000 units at the strike price (in this case 223.00). Let's now say that price has changed and the rate for gbp/jpj is 225.00 at the moment when it expires. That means that I just got 100 pips of profit (225.00 - 223.00 - 1.00 = 1.00 = 100 pips). That's roughly about $860 now. But if price of option, when it expired was 224.00 I would be at the break even point. Another scenario. Price has gone down to 220.00. That would mean that I have not lost anything except my premium (1.00).>>
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I'm not really sure what's wrong with this one... >>
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"You have a loss limited to the premium and potentially unlimited profit if you buy a Call (or Put) option.">>
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What's the difference between Call and Put than?

"Where can we trade fx options?"

Saxobank, for example.

[fastbusiness]

What, I asked very hard qoestion?! Check what I wrote and tell me where I got wrong. I'm sick of reading tutorials and that 20 kb ebooks...