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Derivatives

Exercise Settlement Amount

Understanding the concept of a stock option can be a bit tricky, so let's break it down. The strike price refers to the predetermined price at which an option can be bought or sold, while the spot price is the current market price. The difference between the two, multiplied by the lot size, determines the value of the contract. This calculation is essential in determining the profitability of a stock option.

Forward Contract

This type of contract is used to manage business risks, such as fluctuations in commodity prices or foreign currency exchange rates. A forward contract is a legally binding a...

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Bull Spread

Let's dive into the concept of Bull Spread, a strategy commonly used by options traders to capitalize on a predicted increase in the price of the underlying asset. This stra...

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Deep Discount Bonds

Deep Discount Bonds, also referred to as zero-coupon bonds, are financial instruments that are acquired at a fixed face value, and the full amount of the investment is paid ...

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Holder (Option Buyer)

The holder, also known as the owner, of an option contract possesses the privilege to exercise the option within its duration. This privilege is acquired by the holder throu...

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