The exchange’s options are currently quoted in premium, whereas standard practice in the dominant over-the-counter market is to quote in vol. According to a draft proposal, vol-quoting will initially be available for European- and American-style options in five currency pairs; a sixth pair, AUD/USD will have vol-quotes for American-style only.
New functionality will allow the options to be traded with an auto-hedge into the nearest quarterly month of the underlying. The exchange says this functionality eliminates the volatility-to-premium conversion and constant price modification previously required to trade options volatility in premium markets.
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