Their are two types of forex options. The traditional option gives the buyer the right to purchase a currency at a set price and time. If the currency being bought appreciates during the set time, then the trader can sell this currency at a profit. If the currency depreciates, then the trader only loses the premium that was paid for the option. The other type of option is the single payment option (spot). This option is really a prediction by the trader on what they think will occur on the market. If the traders predictions are correct, then the profit potential is unlimited. Also, the premium is the only thing can be lost when a trader uses a single payment option (SPOT).

Their are two types of traditional options. The american version can be exercised at any time up until the expiration, while the european version can be exercised only at the time of the expiration. The traditional options have lower premiums than the spot options. They have more flexibility than the spot options, but they can be more difficult to set-up and to be execute by a forex trader.

Spot options allow for many different scenarios. Spot options have tightened spread rates, a 1% margin requirement, no limits up or down, and you sell before you buy. You should trade options because the downside risk is limited to the option premium, their is unlimited profit potential, you get to see the price and the expiration date, and you can use traditional or single payment options to trade on your predictions of the market movements without risking very much of your capital.