No-Touch Spot Optionsby InvestorGuide Staff
For investors new to forex SPOT options and who are unsure of just what kind of scenarios to predict, there is also a No-Touch Spot option where the investor receives a payout if the exchange rate on a currency pair does not reach a certain level before expiration (this can apply to call or put options). An investor may choose this Forex Spot option if he/she thinks that the market is incorrect in its future predictions for the exchange rate on a certain currency pair (say the EUR/USD). The market may think that the EUR will continue to gain ground against the dollar in the coming month. However, an investor may think that the dollar will indeed lose ground but not as much as anticipated. If so, the investor may choose a No-Touch Spot option with a lower level than the market predicts. If that level is not reached, the investor receives a payout. Again, maximum profit is limited to total payout and maximum losses are limited to premium price paid for option.