Basics of FX Options

Call Option or Put Option?

A foreign exchange (FX) trade is a simultaneous purchase of one asset and the sale of another. Therefore, it is easy to get confused about calls and puts. The standard FX terminology where the first currency in a currency pair (for example, USD in the USD/JPY pair) is the 'base' currency is not always helpful. From a mathematical standpoint, USD in this case is actually the denominator, not the numerator.