American-style option - An option contract that may be exercised at any time before it expires. Ask - The quoted price at which a customer can buy. Also referred to as the ‘offer,’ ‘ask price,’ or ‘ask rate.’ Bid - The quoted price where a customer can sell. Also known as the ‘bid price’ or ‘bid rate.’ Bid/Ask Spread - The point difference between the bid and ask (offer) price. Call - A call option gives the option buyer the right to purchase a particular commodity at a state exchange rate. Risk is limited to the investment made, which is premium and all fees paid. European-Style Option - An option contract that can be exercised only on or near its expiration date. Expiration - This is the last day on which an option may either be exercised or offset. Leverage - The ability to control large dollar amount of a commodity with a comparatively small amount of capital. Also known as ‘gearing.’ Margin - See Security Deposit. Offer - See ask. Open Position - Any transaction that has not been closed out by a corresponding opposite transaction. Premium - The price an option buyer pays for the option, not including commissions. Put - A put option gives the option buyer the right to sell a particular commodity at a stated exchange rate. Risk is limited to the investment made, which is premium and all fees paid. Security Deposit - The amount of money needed to open or maintain a position. Also known as ‘margin.’ Settlement - The actual delivery of currencies made on the maturity date of a trade. Spread - The point or pip difference between the ask and bid price of the option. Strike Price - The exchange rate at which the buyer of a call has the right to purchase a specific commodity or at which the buyer of a put has the right to sell a specific commodity. Also known as the 'exercise price'.