Currency exchange long trade call option

In terms of market risk, FX options are more sensitive to macroeconomic factors than stock or futures options. Political and/or economic factors play a large role on the view of currencies. When currency options first came on the scene, they were indeed traded OTC - where institutions and broker/dealers trade with each other over the phone to hedge their foreign currency exposure. Call options give the buyer the right to buy the underlying currency. The holder of a call option has Combining long and contract to exchange currency for one. For some reason, I always assumed that forex pairs would have higher volatility than, say, index options. To gauge the magnitude of volatility difference, I began to compare a series of forex pairs and a few indices.

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