The pricing model Saxo uses is similar to the one we apply to Vanilla Options (based on Black-Sholes model). Spreads are variable depending on maturity and currency cross.
The pricing displayed on your trading platforms is dynamic bid/ask spreads, quoted as a percentage of the potential payout, reflecting the market's expectation of the probability that the spot rate will reach (or not reach) the trigger (or barrier) level prior to expiry.
Touch Options are traded on live streaming prices from 100 up to 25,000 units of base currency of potential Payout. Other amounts are available on an RFQ basis. This will generate a two-way live quote in your platform.
There is no minimum ticket fee associated with trading FX Touch Options with Saxo.
At Saxo FX Touch Options can be either bought or sold.
When buying an option, you have to pay the full Premium in cash. The Premium is subtracted from the Cash Balance (initially shown as 'Transactions not booked'. At the end of the day it is subtracted from the Cash Balance).
The current value (positive) of the bought position is displayed in 'Non-margin positions' and subtracted from 'Not available as margin collateral'. Thus, you cannot use the value of Touch Options for margin collateral.
When selling an option, the Premium is added to the Cash Balance (initially shown as 'Transactions not booked'. At the end of the day it is added to the Cash balance). You need to have the cash sufficient for the potential payout in the event of an exercise (One Touch) or expiry (No Touch).
The current value (negative) of the sold position is displayed in 'Non-margin positions'. In order to reserve the full potential Payout, the difference between the current value and the potential payout is subtracted from 'Not available as margin collateral'. Hence, your full potential loss from the Option Payout is not available for margin collateral.
Settlement and payout
At Saxo Touch Option positions are cash settled automatically when they generate a Payout. The Payout is 100% of the base currency. If the Option expires without exercising, then the Payout is 0%.
One Touch Options will generate the payout automatically if and when triggered before the expiry time, or else (if the barrier has not been reached) automatically expire at 10:00 EST on the expiry date. No Touch options will generate an automatic payout if barrier has not been reached prior to 10:00 EST on the expiry date, or disappear automatically if trigger is reached.
Although P/L from a closed Touch Option (e.g. buying and selling an Option before it exercises/expires) will be available for use in other products margin trading, final settlement is done at the end of day (EOD), as in the way Vanilla Options are settled.
Though Touch Options are not margin products, positions will affect the amount you have 'Available for Margin Trading' as seen in your Account Summary.
Therefore, if margin positions are held on the account, the 'Margin Utilisation' will increase when adding Touch Option positions.
Note: Before opening the position, a pre-check will be done to ensure that you cannot accidentally open a Touch Option position that will move the Margin Utilisation above 100%.