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SPAN Margin

Let's delve into the world of finance and explore the concept of initial margin for the F&O segment. This margin is not calculated on an individual basis, but rather on a portfolio approach. To perform this calculation, we use a software called SPAN® (Standard Portfolio Analysis of Risk). This powerful tool generates 16 different scenarios by adjusting price and volatility values. It then determines the potential loss the portfolio could face in each scenario. This allows us to make informed decisions and manage risk effectively in the F&O segment.

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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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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Put Option

This allows them to sell the stock at a higher price, making a profit. On the other hand, a call option gives the holder the right to buy a stock at a stated price within a f...

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Call Option

A call option grants the holder the right, but not the obligation, to purchase a stock at a predetermined price during a specific timeframe. It is commonly used by investors...

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