USD/CNY Currency Options let a buyer pay a premium for a currency exchange right. A USD call buys USD with CNY; a USD put sells USD for CNY. The examples below show the cost and result of each trade.
What the call and put give you
A call locks in the right to buy USD at the strike exchange rate. A put locks in the right to sell it there. Paying the premium gives the buyer a choice; it does not oblige the buyer to exercise.
All example rates are CNY per USD. A higher rate means a stronger USD.
The example is a hypothetical vanilla currency option covering 100,000 USD. The premium and results are measured in CNY. These are illustrative negotiated terms, not a claim about an exchange contract size.
The example trade
Assume the underlying starts at 7.2 CNY per USD. One option has a strike of 7.2, a premium of 0.02 and a multiplier of 100,000. The total premium is CNY 2,000. Prices and premiums are hypothetical; the call and put use equal premiums to make the comparison easy.
The following results are at expiration, before fees. If exercise creates another position, the calculations assume that position is immediately closed at the stated value.
Buying USD calls
You buy the call because you expect the underlying price to rise. At 7.3 CNY per USD, the right at the strike is worth (7.3 − 7.2) × 100,000 = CNY 10,000. After the premium, your profit is CNY 8,000.
At 7.2 or below, the call expires without intrinsic value and loses its CNY 2,000 premium. Its expiration breakeven is 7.22 CNY per USD. At 7.21, the price has risen but the trade still loses CNY 1,000.
Buying USD puts
If you expect a fall instead, the put costs CNY 2,000 in this example. At 7.1 CNY per USD, it is worth (7.2 − 7.1) × 100,000 = CNY 10,000. Your profit is CNY 8,000 after the premium.
At 7.2 or above, the put loses its entire premium. Its expiration breakeven is 7.18 CNY per USD. A smaller fall to 7.19 still leaves a loss of CNY 1,000.
Before expiration
You can sell an option to close when a market is available. Its resale value also depends on time remaining and implied volatility, so the expiration breakevens do not determine every earlier trading result.
The purchased option can lose its full premium. Exercise may create a separate position or funding obligation. Selling an uncovered option can produce losses larger than the premium received.
USD/CNY market reference
A local reference chart is not available for this pair. CNY and CNH are separate market quotations and should not be substituted for one another.
References
CFETS RMB/FX option market · Compare offshore HKEX USD/CNH options · CME: FX quote conventions · CME: FX products and specifications · Federal Reserve: monetary policy transmission · Options on futures: exercise and assignment