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Derivatives

Extrinsic Value

The intrinsic value is the inherent value of an option determined by its underlying asset's current price. This means that the extrinsic value is influenced by factors such as time until expiration, volatility, and interest rates.

Understanding the concept of extrinsic value is crucial for investors in the realm of finance. It refers to the additional value that an option holds beyond its intrinsic price, which is based on the underlying asset's current market price. In simpler terms, it is the premium that investors are willing to pay for the potential future profits of the option. However, this value is not set in stone and is subject to various external factors such as time, volatility, and interest rates.

Long Hedge (Futures)

A long hedge refers to a strategy where an investor takes a long position on a futures contract. This is commonly utilized by hedgers who plan to purchase an asset in the fu...

Intermarket Spread

Intermarket spread refers to the variation in price of a particular contract across different exchanges. This difference can arise due to various factors such as market dema...

Customer Margin

As we delve into the world of futures, it is crucial to understand the concept of Customer Margin. This term refers to the monetary assurance needed from individuals purchas...

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 ...

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...

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 ...

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Fixed Income

Investments that provide regular, fixed payments, such as bonds and treasury bills.

Retirement Planning

All terms and concepts related to the process of saving and investing to ensure financial security a

Corporate Actions

Terms related to decisions and events initiated by a company that can impact its stock, such as divi

Insurance

All terms and concepts related to insurance, which is a financial arrangement that provides protecti

Financial Terms

A comprehensive resource containing definitions and explanations of terms, concepts, and jargon used

Options and Futures

All terminologies and concepts related to financial derivatives, including options and futures contr

Property

The "Property" category in finance encompasses all aspects related to real estate and tangible asset

Commodity

All terms related to the basic goods used in commerce that are interchangeable with other goods of t

Gold

All terms and concepts related to the precious metal gold, including its price, trading, investment,

Financial Instruments

Legal contracts that represent financial value, such as stocks, bonds, options, futures, and various

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