B. Options on Foreign Exchange

OTC options
- traded by financial institutions (market makers)
- more liquid than forward contracts
- can be tailor made

Example: a call option to buy 12,500 British Pounds for $1.4857 per pound on Sept. 19, 1997.

True or False: A call option for pounds

(in terms of $s) is the

same as a put option for

$ (in terms of pounds).

traded options