The basic characteristics of foreign exchange derivatives trading are: margin trading, that is, as long as a certain percentage of margin is paid, the full amount can be traded without actual principal transfer. Contracts are generally terminated by price difference settlement, and only contracts performed by physical delivery on the due date require the buyer to pay the full payment. Therefore, the trading of financial derivatives has leverage effect. The lower the margin, the greater the leverage effect and the greater the risk.
1, foreign exchange forward contract
A foreign exchange forward contract means that both parties agree to buy or sell a certain amount of financial products at a certain price on or before a certain date in the future. Foreign exchange forward contract is the longest and simplest financial derivative, and it is also the basis of several other basic derivatives. A new product that has developed rapidly in recent years is the forward interest rate agreement.
2. Foreign exchange futures
Foreign exchange futures are developed on the basis of commodity futures and are a form of financial futures. Foreign exchange futures are standardized contracts that promise to buy or sell financial assets at some time in the future. Its quantity, quality and delivery time are fixed, and the only change is the price. Foreign exchange futures contracts are traded in multiple currencies. Forex futures trading principle is the same as commodity futures trading principle. By using the convergence of futures prices and spot prices, when futures contracts are close to delivery, futures prices and spot prices will tend to be consistent. In the spot and futures markets, the varieties, quantities and delivery periods are the same, but the directions are opposite. The profits of one market make up for the losses of the other market and avoid the risk of price fluctuation. The main characteristics of forex futures trading are: the transaction is a standardized contract transaction; The transaction is a margin transaction; Forward foreign exchange market is a tangible market; The transaction is based on membership system and daily settlement system; Participants are hedgers and speculators. The hedging trading method in forex futures trading is basically the same as that in general commodity period, and the basic methods can be long hedging and short hedging.
3. Currency options
Currency option is a right contract, which means that the buyer has the right to buy or sell a certain financial asset at an agreed price on an agreed date or within an agreed period after paying a certain fee (called option fee). According to the rights of the buyer, options can be divided into call options and put options. The former means that the buyer has the right to buy a certain financial asset at the agreed price, while the latter means that the seller has the right to sell a certain financial asset at the agreed price. The buyer of the option has the right to buy or sell, but has no obligation to buy or sell.