What is Currency option?

TLDRThis video from the Federal Bank Treasury Knowledge Series explains currency options, a derivative contract allowing investors to hedge against exchange rate fluctuations. The buyer has the right, but not the obligation, to buy or sell currency at a predetermined price on a future date. Two types of options are discussed: call options (right to buy) and put options (right to sell). An example is provided to illustrate how currency options help businesses manage risk. The video highlights the potential for unlimited profit with limited loss, and emphasizes the benefits of professional hedging solutions tailored to business needs.