Currency Futures Options - Is it the Best Way to Trade Forex?
Before deciding whether it is worth your while trading currency futures options you should first understand the nature of currency futures and their associated risks. Currency futures options are becoming less popular since the appearance of many brokers that allow you to trade the spot price of a currency pair, (as opposed to a future price at a specified date) with the same degree of leverage but without the same risk that comes with futures contracts.
If all currencies were fixed in value relative to one another, there would be no need or opportunity for currency futures or their associated options. Because currencies rise and fall in value on a continuing basis, there is a corresponding need for international commerce to guard against currency fluctuations that might significantly alter their profitability on sales that are denominated in one currency, but transferred back to a home currency, which may be falling in relative value.
This can lead to substantial effective losses, so large organizations and government seek to hedged their risk by using forex futures options that essentially fix the exchange rate in place, in return for a small premium. Certainty thus becomes a major factor in this sort of trade.
Quoted