Search results
Results From The WOW.Com Content Network
A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, gambles, [1] many types of over-the-counter and derivative products, and futures contracts.
The rationale behind the above formulation of the Vanna-Volga price is that one can extract the smile cost of an exotic option by measuring the smile cost of a portfolio designed to hedge its Vanna and Volga risks. The reason why one chooses the strategies BF and RR to do this is because they are liquid FX instruments and they carry mainly ...
The main principle behind the model is to hedge the option by buying and selling the underlying asset in a specific way to eliminate risk. This type of hedging is called "continuously revised delta hedging " and is the basis of more complicated hedging strategies such as those used by investment banks and hedge funds .
From the viewpoint of the option issuer, e.g. an investment bank, the gamma term is the cost of hedging the option. (Since gamma is the greatest when the spot price of the underlying is near the strike price of the option, the seller's hedging costs are the greatest in that circumstance.)
As of the first quarter in 2009, total assets under management for hedge funds with high-frequency trading strategies were $141 billion, down about 21% from their peak before the worst of the crises, [26] although most of the largest HFTs are actually LLCs owned by a small number of investors.
Similarly to a stack of plates, adding or removing is only practical at the top. Simple representation of a stack runtime with push and pop operations. In computer science, a stack is an abstract data type that serves as a collection of elements with two main operations: Push, which adds an element to the collection, and
A hedge fund is a pooled investment fund that holds liquid assets and that makes use of complex trading and risk management techniques to aim to improve investment ...
As the debt equity ratio (i.e. leverage) increases, there is a trade-off between the interest tax shield and bankruptcy, causing an optimum capital structure, D/E*.The top curve shows the tax shield gains of debt financing, while the bottom curve includes that minus the costs of bankruptcy.