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Derivatives

Convergence

It is an essential concept in financial markets.

As we dive into the world of finance, it's important to understand the concept of convergence. This term refers to the gradual alignment of the futures contract's price with the spot or cash price of the underlying securities. In simpler terms, it's the process of closing the gap between the two prices over time. This plays a crucial role in the functioning of financial markets, making it a fundamental concept to grasp.

Expiration Date

The option expiration date marks the end of an option's validity and is a crucial factor in the decision-making process for traders. It serves as the deadline for exercising...

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Intrinsic Value of an Option

This value is important to consider when making investment decisions. Understanding the concept of intrinsic value in the world of finance is crucial for making informed inv...

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European Options

It allows the holder to buy or sell an underlying asset at a predetermined price on the expiration date. The key difference between a European option and an American option i...

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Out-of-the-money

An option that would result in a loss upon immediate exercise is known as an out-of-the-money option. Specifically, a Call option is considered out-of-the-money when the cur...

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