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Derivatives

Options Contracts

This allows investors to speculate on the future price movements of an asset without committing to a purchase. An option contract is a vital financial tool that grants investors the choice to either buy or sell an asset at a prearranged price within a defined time period. Unlike other contracts, it offers the right to buy, but not the obligation. This flexibility allows investors to make informed predictions about an asset's future price fluctuations without being bound to a purchase. Think of it as a risk management strategy that empowers investors to make strategic decisions in the ever-changing world of finance.

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 a...

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Derivative

These instruments can be used for hedging risks or for speculation. Derivatives, also referred to as financial derivatives, are contracts that derive their worth from the un...

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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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Basis

In finance, we often refer to basis as the discrepancy between the current price of a security and the price of its corresponding futures contract. This can be thought of as...

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