Foreign Exchange Derivative

A foreign exchange derivative is a financial derivative whose payoff depends on the foreign exchange rate(s) of two (or more) currencies. These instruments are commonly used for currency speculation and arbitrage or for hedging foreign exchange risk. Specific foreign exchange derivatives, and related concepts include:

Instruments:

  • Binary option: Foreign exchange
  • Currency future
  • Currency swap
  • Foreign exchange forward
  • Foreign exchange option
  • Foreign exchange swap
  • Forward exchange rate
Concepts:
  • Carry trade
  • Covered interest arbitrage
  • Foreign exchange hedge
  • Foreign exchange market
  • Foreign exchange risk
  • Foreign exchange spot
  • Interest rate parity
  • Uncovered interest arbitrage
Derivatives market
Derivative (finance)
Options
Terms
  • Credit spread
  • Debit spread
  • Exercise
  • Expiration
  • Moneyness
  • Open interest
  • Pin risk
  • Risk-free rate
  • Strike price
  • The Greeks
  • Volatility
Vanilla options
  • Bond option
  • Call
  • Employee stock option
  • Fixed income
  • FX
  • Option styles
  • Put
  • Warrants
Exotic options
  • Asian
  • Barrier
  • Binary
  • Cliquet
  • Compound option
  • Forward start option
  • Interest rate option
  • Lookback
  • Mountain range
  • Rainbow option
  • Swaption
Combinations
  • Collar
  • Fence
  • Iron butterfly
  • Iron condor
  • Straddle
  • Strangle
  • Covered call
  • Protective put
  • Risk reversal
Options spreads
  • Backspread
  • Bear spread
  • Bull spread
  • Box spread
  • Butterfly spread
  • Calendar spread
  • Diagonal spread
  • Ratio spread
  • Vertical spread
  • Intermarket Spread
Valuation of options
  • Binomial
  • Black
  • Black–Scholes
  • Finite difference
  • Garman-Kohlhagen
  • Put–call parity
  • Simulation
  • Trinomial
  • Vanna–Volga pricing
Swaps
  • Basis swap
  • Conditional variance swap
  • Constant maturity swap
  • Correlation swap
  • Credit default swap
  • Currency swap
  • Dividend swap
  • Equity swap
  • Forex swap
  • Inflation swap
  • Interest rate swap
  • Total return swap
  • Variance swap
  • Volatility swap
Forwards/Futures
  • Backwardation
  • Commodity futures
  • Contango
  • Currency future
  • Financial future
  • Forward market
  • Forward price
  • Forward rate
  • Index future
  • Interest rate future
  • Margin
  • Pricing of Forwards
  • Pricing of Futures
  • Single-stock futures
Other derivatives
  • Credit default option
  • CLN
  • Contract for difference
  • CPPI
  • Credit derivative
  • ELN
  • Equity derivative
  • Foreign exchange derivative
  • Fund derivative
  • Inflation derivatives
  • Interest rate derivative
  • PRDC
  • Real estate derivatives
  • Real options
Market issues
  • Tax policy
  • Consumer debt
  • Corporate debt
  • Government debt
  • Late 2000s recession


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    Virginia Woolf (1882–1941)

    Ideal conversation must be an exchange of thought, and not, as many of those who worry most about their shortcomings believe, an eloquent exhibition of wit or oratory.
    Emily Post (1873–1960)

    Poor John Field!—I trust he does not read this, unless he will improve by it,—thinking to live by some derivative old-country mode in this primitive new country.... With his horizon all his own, yet he a poor man, born to be poor, with his inherited Irish poverty or poor life, his Adam’s grandmother and boggy ways, not to rise in this world, he nor his posterity, till their wading webbed bog-trotting feet get talaria to their heels.
    Henry David Thoreau (1817–1862)