The basic difference between financial futures and options is that the trader buys an option , and not an obligation to buy a quanity of currency at a given exchange rate in the future. The option gives the right but not the obligation to buy the currency within a given time or at the end of the time. American options which can be exercised at any time during the option period. The forward exchange rate included in a forward exchange contract makes it possible for the trader to calculate his cash flow, his profit margin and the cost of his purchases in advanve.

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