A Good Hedge Keeps Dogs Off the Yard
Overall, trading by banks in foreign-currency options increased at an annual rate of about 80%. Exchange-traded foreign-currency options on futures contracts, the newest form of currency option, increased by about 40% annually. Prior to 1980 hedging in foreign-currency markets was limited to contracts traded in the forward and futures markets. These markets were used, by large corporations and dealers. There was little room for smaller players.