The real beauty of Single Payment Options Trading (SPOT) options is their simplicity. An investor merely imagines (foresees) a possible scenario for a currency pair and if the pair acts as predicted, there is a payout. Investors set up SPOT accounts with traders and companies specializing in these Forex options. The investor simply picks a currency pair, predicts what the future exchange rate will be by a certain date (this is also up to the investor), and the trader will be given a premium quote. If the investor accepts the premium, this amount will be deducted from the trading account. Should the option not play out the way it was expected, the investor simply loses the premium amount. However, if the investor predicts the exchange rate fluctuation correctly, then the payout is deposited into the trader's account generating a relatively good rate of return.
Source: http://www.investorguide.com/igu-article-978-forex-basics-investing-in-forex-options.html
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