profit loss hedge

Another potential advantage of a hedging strategy is this: in the course of the option’s life, you may reassess your view of the market and wish to actually close the short spot position (even at a loss) in the expectation that the market is going the other way. In this scenario, you close the short position but keep the option, hoping that it will come in the money before expiration. For example, let’s say that after a few days, the spot price for EURJPY rises to 105.50 from the entry level of 105.00, and you have changed your mind about the direction of the market. Since you believe the rate will continue to rise, you close your spot position for a loss, but hang on to your option until the expiration. At any level above the break-even point of 106.3 you will begin to make a profit. And again, the option itself might be resold before expiration.
As shown, options offer you many ways of trading in the market and reducing your risks as well. To see how this is done on the Client Station, please proceed to our Forex Quick Start, found in the main toolbar under Trading. Then choose Forex and then the Forex Quick Start.
Glossary
For more information on the trading conditions at Saxo Bank, go to the Account Summary on your Client Station and open the section entitled "Trading Conditions" found in the top right-hand corner of the Account Summary.