This article introduces Foreign Exchange Options, and provides an Excel spreadsheet to calculate their price. Foreign exchange options also known as foreign currency options help investors hedge against exchange rate fluctuations.

Pricing Foreign Exchange Options

The Garman-Kohlhagen model was developed in and is used to price European style foreign currency options. This spreadsheet uses these equations to calculate the price of a foreign currency option.

Moreover, the spreadsheet also calculates if put-call parity is satisfied. Download Excel Spreadsheet to Price Foreign Exchange Options.

Pricing Foreign Exchange Options

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