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Options and Futures

Performance Bond Margin

In the world of finance, we often encounter terms like margin, especially in the context of futures contracts and options. But what exactly does this term mean? Simply put, margin refers to the amount of money that both the buyer and seller of a contract deposit to ensure that they fulfill their obligations under the contract. However, it's important to note that in commodities, margin is not a payment towards the equity or down payment on the actual commodity. Instead, it serves as a security deposit. This type of margin is further categorized into customer margin and clearing margin.

Capped-Style Option

A capped option, as the name suggests, is an option with a predetermined maximum profit limit. This limit is determined by the option's strike price, along with an additiona...

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Vertical Spread

When trading options, one strategy to consider is buying and selling puts or calls with the same expiration month but different strike prices. This approach, known as a verti...

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Repurchase Agreements or (Repo)

A repurchase agreement, commonly known as a repo, is a contract between a seller and a buyer involving U.S. government securities. The seller agrees to repurchase the securit...

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Reciprocal of European Terms

When discussing exchange rates, it is important to understand the concept of quoting. This refers to the method of measuring the value of one foreign currency unit in relatio...

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