A foreign exchange option is a forward contract for standardized currency amounts and selected calendar dates traded on the exchange market. ()
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Stabilizing speculation refers to the avoidance of a foreign exchange risk, or the covering of an open position. ()
Destabilizing speculation refers to the sale of a foreign currency when the exchange rate falls or is low, in the expectation that it will fall even lower in the future, or the purchase of a foreign currency when the exchange rate is rising or is high, in the expectation that it will rise even higher in the future. ()
Covered interest arbitrage refers to the international flow of short-term liquid capital to earn higher returns abroad. ()
Interest arbitrage refers to the spot purchase of the foreign currency to make the investment and the offsetting simultaneous forward sale() of the foreign currency to cover the foreign exchange risk. ()