Trading USD/CNY Options

Where to start

CFETS describes onshore RMB/FX options, including USD/CNY, traded by bilateral inquiry. Its vanilla options are European-style; participants negotiate the currencies, amount, maturity, premium and settlement arrangements. This is an onshore OTC market, not a universally accessible retail exchange option chain. Access depends on the applicable participant and bank requirements.

Match the currency quotation

The examples quote CNY per USD. A higher number means USD is stronger against CNY. In the USD/CNY quotation, the first currency is the one being bought by a call on the pair.

CME futures quotation conventions can differ from the commonly displayed spot pair. Identify the currency being bought or sold before transferring a trading view into a call or put.

Read the contract terms

Record the notional, strike quotation, premium currency, expiry time and settlement method. OTC amounts may be negotiated; exchange products have specified sizes and underlying months. An option expiry and a futures delivery date are separate.

Use the provider’s current product specification and an executable option chain. Public charts do not establish the available bid, ask or ability to trade a particular expiry.

Funding and exercise

Check whether exercise exchanges currencies, creates futures or leads to a financial payment. Full delivery amounts can be much larger than the premium. Confirm the broker’s cutoff and closeout policy before the deadline.

Before expiry, selling the option to close may preserve time value that exercise gives up, provided a market is available. Counterparty terms and liquidity also matter.

Product resources

CME FX product directory lists exchange products. For an OTC contract, obtain the provider’s written confirmation and settlement terms.

Start with the payoff

USD/CNY Currency Options — Review the calls and puts before choosing a contract.