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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.

Forward (Cash) Contract

They are often used for hedging purposes. A crucial concept in the world of finance is the forward contract, where a seller commits to providing a predetermined amount of a...

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Rally Reaction

According to financial terminology, a decrease in prices after an increase is known as a decline. This is the exact opposite of a rally, which signifies a rise in prices. On...

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Gamma

Delta, also known as the option's hedge ratio, is a vital measure in finance that indicates the rate of change in an option's price in response to a unit change in the under...

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Open Outcry

In the world of finance, there exists a method called "public auction" where verbal bids and offers are made in the trading pits or rings of futures exchanges. This process ...

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