[Deuce]

Are the issuers legally allowed to put out more contracts than there are underlying assets? If not, I will give further thought to this.

P.S. Unimportant point offered just to clarify my initial misunderstanding: your use of the word "option" is incorrect and caused me not to understand post #300. As you are describing it now, the currency is a claim on assets not the right, but not the obligation, to buy (call) assets at a specified price within a specified time.

[Carry_Okie]

Are the issuers legally allowed to put out more contracts than there are underlying assets? If not, I will give further thought to this.

Perhaps so, but then the perception of risk might discount the currency. There would probably be a resulting equilibruim of some sort. There isn't necessarily a maturity date on an option.

Interesting isn't it? Glad you took the time to consider it.