According to the textbook, currency options is the one of the fastest growing segments of the global foreign exchange market. Currency options is a financial contact that give the buyer the right, but not the obligation , to buy or sell a specified number of foreign currency units to the option seller at a fixed dollar price, up to the option’s expiration date. Then there is the American option that can be exercised at any time up to the expiration date and the European option can be exercised only at maturity. If we wan tot applied this to foreign currencies, there are call options and put option. Options are described as In-the-money , at-the-money, and out-the-money. Which simply stand for profit indifference and loss.  In the spot or cash currency trading markets, investors are often afforded considerable leverage with regard to amount invested vs. actual currency amount controlled. When dealing with options, the leverage is obtained through the premium paid for a long option position that defines the maximum risk of the position, while the highly leveraged cash currency trading exposes the investor to potentially unlimited risk. Similar to the text, investopedia explains currency options as investors can hedge against foreign currency risk by purchasing a currency option put or call. For example, assume that an investor believes that the USD/EUR rate is going to increase from 0.80 to 0.90 (meaning that it will become more expensive for a European investor to buy U.S dollars). In this case, the investor would want to buy a call option on USD/EUR so that he or she could stand to gain from an increase in the exchange rate (or the USD rise). Reference http://www.investopedia.com/terms/c/currencyoption.asp