BoxOptions

Overview

OANDA FXTrade BoxOption is a feature of FXTrade that offers access to options trading via a simple flexible graphical interface. You can define the parameters of the option purchased, and the price is calculated instantaneously. Losses are limited to the purchase price of the option.

What is a BoxOption?

A BoxOption is a customer-defined option that is an exotic cross between a binary option and a corridor option. Each BoxOption represents an individual agreement between the customer and OANDA Corporation. BoxOptions cannot be exchanged or traded independently, and they are not standardized. However, they are similar to options in that their pricing (i.e., payout) is calculated based on option pricing theory, and in that the downside risk is limited to the purchase price.

How to purchase BoxOptions

Click on the Price Box button above the graph, or select Price Box from the pop-up menu in the graph area.

Your cursor changes to cross hairs with which you can mark start and end points of the box directly on the graph.

Once you have finished drawing the box on the graph, the “Buy Box Option” dialog box appears, showing you the automatic pricing of the box you selected. Choose HIT (to indicate you believe the graph will touch the box) or MISS (if you believe the graph will not touch the box). Enter the purchase price, or the value of your investment, and the Payment field will update to show you the potential return of the BoxOption. You may also manually amend the size of the box (maximum and minimum levels) and the duration of the box (start and end times).

Once you click submit, you will receive a confirmation of your purchase.

On your trade blotter, the Boxes tab shows the currently open BoxOptions and is updated to show their latest value. On your account summary, the Box Resale Value is the value of all current open boxes.

To close or sell a box before it matures, simply click on its entry in the Boxes tab.

BoxOption Requirements

BoxOptions may be purchased on the following currency pairs:

and must meet the following criteria

• investment size between $1 and $2000
• total exposure for all open boxes cannot exceed $20,000
• starts at least 15 minutes away from current and must end within 7 weeks
• sized at least 5 minutes wide and 10 pips high
• *This feature is not available to Canadian residents
  
  

Risk Disclosure

Transactions in BoxOptions carry a high degree of risk. Purchasers of BoxOptions should familiarize themselves with the type of BoxOptions (i.e., hit or miss) which they contemplate purchasing and the associated risks. The purchaser of BoxOptions may offset the BoxOptions or allow the BoxOptions to mature. If the purchased BoxOptions mature worthless, you will suffer a total loss of your investment. If you opt to offset your BoxOptions prior to maturity, you may none-the-less experience a loss, up to and including a total loss of your investment. If you are contemplating purchasing deep-out-of-the-money BoxOptions, you should be aware that the chance of such BoxOptions becoming profitable ordinarily is remote.