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Derivatives

Convergence

It is an essential concept in financial markets.

As we dive into the world of finance, it's important to understand the concept of convergence. This term refers to the gradual alignment of the futures contract's price with the spot or cash price of the underlying securities. In simpler terms, it's the process of closing the gap between the two prices over time. This plays a crucial role in the functioning of financial markets, making it a fundamental concept to grasp.

Exercise

This can happen at anytime before the options contract expires. Options trading involves the concept of "exercising," which refers to the act of utilizing the right to buy ...

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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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At-the-money

Let's delve into the world of finance and explore the concept of at-the-money options. These options, if exercised immediately, would result in zero cash flow. In simpler te...

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Initial Margin

In the world of finance, the concept of derivatives is a crucial one to understand. Essentially, derivatives are financial instruments that derive their value from underlyin...

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