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Home Dictionary O Outright Futures Position An open futures position is a one-way position in a futures contract and is not part of a larger or more complex strategy. An open position exposes the trader to more risk than a hedged position, although a net position theoretically has more profit potential. If a hedged or netting position is added to a direct position, it is no longer a direct position, but rather a hedged or partially hedged position. E-Mini
September 25, 2022 E-mini are futures contracts traded electronically, the value of which is a fraction of the value of the corresponding standard futures contracts. Variable Price Limit
September 25, 2022 A variable price cap is a method of controlling volatility in commodity futures exchanges. Agribusiness
September 25, 2022 Agribusiness is a combination of the words “agriculture” and “business” and refers to any business related to agriculture and commercial activities related to agriculture. American Option
September 25, 2022 An American option is a type of option contract that allows holders to exercise their rights at any time up to and including the expiration date. Asset Swap
September 25, 2022 An asset swap is used to convert cash flow characteristics in order to hedge risks from one financial instrument with undesirable cash flow characteristics to another with favorable cash flow characteristics. Asset Swapped Convertible Option Transaction (ASCOT)
September 25, 2022 A Convertible Asset Substitution Option Transaction, or ASCOT, is a way of separating the fixed income and equity components from a convertible bond. Assignment
September 25, 2022 A cession is a transfer of rights or property from one person to another.# At The Money
September 25, 2022 In the money (ATM) are calls and puts where the exercise price is equal to or very close to the current market price of the underlying security. Backwardation
September 25, 2022 Backwardation is when the current price of the underlying asset is higher than the prices traded in the futures market. Baltic Dry Index
September 25, 2022 The Baltic Dry Index (BDI) is an index of average prices paid for the transport of dry bulk materials on more than 20 routes. Bank Bill Swap Rate (BBSW)
September 25, 2022 The Bank Note Swap Rate (BBSW) is a short-term interest rate used as a benchmark for valuing Australian dollar derivatives and securities, primarily floating rate bonds. Barrier Option
September 25, 2022 Barrier options are a type of exotic option in which the payoff depends on whether the option reaches or exceeds a predetermined barrier price. Bear Call Spread
September 25, 2022 Bear call spreads are formed by buying two call options, one long and one short, with different strike prices but the same expiration date. Bear Put Spread
September 25, 2022 A bearish put spread is an option strategy implemented by a bearish investor who wants to maximize profits with minimal losses. Bear Spread
September 25, 2022 A bear spread is a bear option strategy used when an investor expects a moderate decline in the price of the underlying asset. Bermuda Option
September 25, 2022 The Bermuda option can be exercised early, but only on certain dates before its expiration date. Binomial Option Pricing
September 25, 2022 The binomial option pricing model values options using an iterative approach that uses multiple periods to price US options. Black Scholes Model
September 25, 2022 The Black-Scholes Model, also known as the Black-Scholes-Merton Model (BSM), is a differential equation widely used to price option contracts. Bond Futures
September 25, 2022 Bond futures are contracts that give the holder of the contract the right to buy a bond on a specified date at a price specified today. Boundary Conditions
September 25, 2022 Boundary conditions were used to establish the minimum and maximum possible values of call and put options prior to the introduction of binomial tree and Black-Scholes pricing models. Box Spread
September 25, 2022 A box spread is an option arbitrage strategy that combines buying a bullish call spread with a corresponding bearish put spread. Bull Call Spread
September 25, 2022 A bull call spread is an option strategy used when a trader bets that a stock will have a limited increase in value. Bull Put Spread
September 25, 2022 Bull Spread Put is an option strategy that is used when an investor expects a moderate increase in the price of the underlying asset. Bull Spread
September 25, 2022 A bull spread is an optimistic option strategy used when an investor expects a moderate increase in the price of the underlying asset. Butterfly Spread
September 25, 2022 The butterfly spread is an option strategy that combines bullish and bearish spreads.