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Some of the more common derivatives include forwards, futures, options, swaps, and variations of these such as synthetic collateralized debt obligations and credit default swaps. Most derivatives are traded over-the-counter (off-exchange) or on an exchange such as the Chicago Mercantile Exchange , while most insurance contracts have developed ...
In many cases, options are traded on futures, sometimes called simply "futures options". A put is the option to sell a futures contract, and a call is the option to buy a futures contract. For both, the option strike price is the specified futures price at which the futures is traded if the option is exercised.
John C. Hull (2000), Options, Futures and Other Derivatives, Prentice-Hall. Abraham Lioui & Patrice Poncet (March 30, 2005), Dynamic Asset Allocation with Forwards and Futures, Springer; Keith Redhead (31 October 1996), Financial Derivatives: An Introduction to Futures, Forwards, Options and Swaps, Prentice-Hall; Forward Contract on Wikinvest
Futures vs. options: Key differences. Both futures and options give traders the power of leverage, allowing them to put up a little money to profit on the move of a much larger quantity of the ...
An accreting swap is used by banks which have agreed to lend increasing sums over time to its customers so that they may fund projects. A forward swap is an agreement created through the synthesis of two swaps differing in duration for the purpose of fulfilling the specific time-frame needs of an investor. Also referred to as a forward start ...
Equity basket derivatives are futures, options or swaps where the underlying is a non-index basket of shares. They have similar characteristics to equity index derivatives, but are always traded OTC (over the counter, i.e. between established institutional investors), [ dubious – discuss ] as the basket definition is not standardized in the ...
These are options contracts, swaps contracts and futures contracts on a whole range of underlying products. The members of the exchange hold positions in these contracts with the exchange, who acts as central counterparty. When one party goes long (buys a futures contract), another goes short (sells). When a new contract is introduced, the ...
Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership, interest in an entity or a contractual right to receive or deliver in the form of currency (forex); debt (bonds, loans); equity (); or derivatives (options, futures, forwards).