Most “vanilla” options strategies involve simultaneously buying and selling put and call options at different strike prices and sometimes different expiration months. Although the permutations are virtually endless, ultimately all option trades fall into two categories: high-volatility (extensive price movement) or low-volatility (little price movement).
Options can be used to trade directional moves, but it is their ability to earn profits from bets on volatility rather than just direction that makes them unique instruments. The forex market takes these special properties further and simplifies the trader’s ability to trade volatility through a set of specific “exotic” options.
Until recently, exotics have only been available to large corporate and institutional accounts, but now retail accounts can trade these products as well.
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