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Derivatives

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 as time until expiration, volatility, and interest rates.

Understanding the concept of extrinsic value is crucial for investors in the realm of finance. It refers to the additional value that an option holds beyond its intrinsic price, which is based on the underlying asset's current market price. In simpler terms, it is the premium that investors are willing to pay for the potential future profits of the option. However, this value is not set in stone and is subject to various external factors such as time, volatility, and interest rates.

Derivative Security

Securities that derive their value from another security are known as underlying securities. This means that their worth is influenced by the features and value of the under...

Deliverable Grades

Futures contracts are an essential tool for traders in the financial market. As a knowledgeable professor of finance, it is important to understand the concept of a futures ...

Long Hedge (Futures)

A long hedge refers to a strategy where an investor takes a long position on a futures contract. This is commonly utilized by hedgers who plan to purchase an asset in the fu...

Delivery Points

Futures exchanges have specific locations where commodities are delivered upon the expiration of a contract. These locations are carefully selected and approved by the exchan...

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 ...

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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Commodity

All terms related to the basic goods used in commerce that are interchangeable with other goods of t

Market Entities

All terms related to various types of organizations or individuals, like investors, banks, insurers,

Stocks

All terms and concepts related to stocks, also known as equities, which represent ownership shares i

Retirement Planning

All terms and concepts related to the process of saving and investing to ensure financial security a

Public Offerings

All terms related to a company selling its shares or bonds to the public for the first time (IPOs) o

Technicals

All terms and concepts related to technical analysis in finance, which involves using historical pri

Taxes

All terminology and concepts related to various tax types, tax laws, and taxation principles.

Fixed Income

Investments that provide regular, fixed payments, such as bonds and treasury bills.

Currency

All terms related to the system of money in general use in a particular country, representing a medi

Financial Terms

A comprehensive resource containing definitions and explanations of terms, concepts, and jargon used

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