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Options and Futures

Hedging

As a financial expert, it is important to understand the concept of hedging. This involves mitigating the risk of price fluctuations in the cash market by taking a counter position in the futures market. This strategy, known as hedging, is commonly used by businesses to safeguard against unfavorable price changes. There are two types of hedging, namely Selling (Short) Hedge and Purchasing (Long) Hedge, which are both utilized by hedgers to protect their assets.

European-Style Options

An option contract is a financial agreement that grants the holder the right to buy or sell an underlying asset at a predetermined price within a specific time frame. This p...

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Limits

In the world of finance, there are several important concepts that every investor should be familiar with. These include position limit, price limit, and variable limit. A p...

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Time Value

As a knowledgeable professor in finance, it is essential to understand the concept of option premium. Option premium refers to the money an option buyer is willing to pay in ...

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Suspension

As we conclude this evening's session, let us delve into the intricacies of specific futures and options markets traded at the esteemed Chicago Board of Trade. This marketpl...

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