Since the year 2012, the currency options market on the USD-INR has become extremely popular and liquid. In fact, under the governorship of Dr. Raghuram Rajan the RBI became an active player in the currency options market, especially in the USD-INR option. Let us understand the options trading on USD-INR in greater detail. You can trade calls and put options on the USD INR pair but they will all be necessarily European in nature. Which means the option can either be squared off during the month or can be exercised only on expiry. Like in case of USD-INR futures, the minimum notional value for trading will be $1000, which is roughly equivalent to Rs.71,000/- in Indian rupees. There will be 3 serial monthly options contracts and will be followed by 1 quarterly contract. Let us look at a snapshot of the USD-INR options trading screenshot below…

USD INR Options.PNG

Source: NSE

In the above screenshot, we have considered the trading screen of the USD-INR December option with strike price of Rs.71. There will be a total of 12 in-the-money option strikes and 12 out-of-the-money options strikes available to you at any point of time. In case you are expecting the USD-INR pair to move up (the dollar to appreciate) then you can buy a call option on the USD-INR pair. On the contrary, if you are expecting the USD-INR pair to move down (the INR to appreciate) then you can buy a put option on the USD-INR pair. Currency derivatives are extremely accessible to retail investors. The lot size is just $1000 and the margin is normally as low as 2.5% even if you consider both the SPAN and extreme loss margins. That is lower than the margins you would pay on trading commodities and substantially lower than the margins you pay on equity F&O trades!