Barrier Price(s): This is the price(s) that option holders can specify on the option whereby the payoff will be dependent upon the price. For example, if you bought a EUR/USD no-touch option with a barrier price of 1.0500, you would only receive your payoff if the EUR/USD rate did not touch 1.0500 before your expiration date. Alternatively, if you bought a EUR/USD double one-touch option with barrier prices of 1.0400 and 1.0600, then you would only receive your payoff if the EUR/USD rate touched EITHER 1.0400 or 1.0600 before your expiration date. These are relevant for FXCM's exotic options.

Call: A call option gives the option holder the right (but not the obligation) to buy the underlying currency at a specified price within a specific time frame.

Collar: This is an option strategy used for hedging that limits losses by capping profits. The mechanics involve purchasing a put option and selling a call option or vice versa.

Delta: This measures the change of an option price given a change in the currency price. This can also be used to estimate the profits and losses of the option. An option delta of .5 would indicate that the long option holder is long the equivalent 50% of the notional. The delta is another way to measure how "probable" it is that the option will end up in the money.

European-style Options: An option contract that can only be exercised at expiration. FXCM only offers European-style options that are only exercisable at 10:00 AM NY time.

Exercise Price (Strike Price): This is the price at which the option becomes at-the-money, or can be exercised at when the expiration date is reached.

Exotic Option: This type of option can be customized and its payoff can be dependent upon any factors that are pre-specified by the option holder. Each structure is unique and can be designed differently.

Expiration Date: The date on which the option ceases to exist. If the option is in the money at expiration time, the option is automatically exercised and the profits in USD are credited to the client's account. If the option is out of the money at expiration, the option expires worthless.

Expiration Time: Time at which the option ceases to exist. If the option is in the money, it will be settled against the prevailing spot price at the expiration time, which is 10:00 AM NY time.

Forward points: This is the difference between the spot and the forward price expressed in pips.

In-the-Money: An option becomes in-the-money when the current market rate reaches the exercise/strike price. A call option is in-the money when the spot price is higher than the strike price. A put option is in-the-money when the spot price is greater than the strike price.

Intrinsic Value: The intrinsic value of an option is the difference between the exercise/strike price and the current market price of the currency. For in-the-money options, always a positive number or zero, because the option can never be worth less than zero. If the option is out-of-the-money, it has no intrinsic value.

Option: An option is a contract that gives the holder the right, but not the obligation to buy or sell a currency at a specified price within a specific time frame.

Out-of-the-money: A call option is out-of-the-money if the exercise/strike price is greater than the current market price. A put option is out-of-the-money if the strike price is less than the current market price. If the option is out-of-the money at the time of expiration, it will expire worthless.

Premium: The premium is the amount the option holder must pay to purchase an option contract. The premium is payable on the trade date.

Put Option: A put option gives the option holder the right (but not the obligation) to sell the underlying currency at a specified price within a specific time frame.

Risk Appetite: The amount of capital that you are willing to lose in order to generate a potential profit.

Spot Value: This term is commonly used in the foreign exchange market to denote the current market price of a currency pair.

Strike Price: Also known as the exercise price, this is the price at which the holder can buy/sell the underlying currency.

Theta: This is a measure of the sensitivity of an option price or value relative to a change in its time to expiry. The longer the time remaining until expiration, the higher the time value.

Trade Date: This is the date on which the option trade is executed.

Vanilla: This is a basic option that only includes the exercise price, expiry and strike.

Volatility: This refers to the measure of the currency's expected fluctuation over a given time period based upon historical fluctuations. This is typically calculated by taking the historic annual standard deviation of daily price changes. Future prices help to determine implied volatility, which is used to calculate option premiums.