On This PageNovember 1989, No. 27

An April 1989 survey of the futures and options trading practices of 127 commercial banks indicates substantial increases in trading of foreign-currency options since 1986.

A Good Hedge Keeps Dogs Off the Yard
Last Updated: 11/29/89

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.