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Options and Futures

Settlement Price

In the world of finance, the settlement price holds great significance. It is the final price at which a commodity is traded on a particular day. This price is determined by the exchange clearinghouse, and it plays a crucial role in determining a firm's net gains or losses, margin requirements, and the following day's price limits for futures and options contracts. In case of a range of closing prices, the settlement price is calculated by taking an average. This term is also known as settle or closing price.

Discount Method

The concept of discounted interest involves issuing a security at a price lower than its par value, and then repaying the full par value at the time of maturity. This differ...

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Exchange for Physicals

In the world of finance, a common transaction between two hedgers involves exchanging futures for cash positions. This process, also known as "against actuals" or "versus ca...

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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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Performance Bond Margin

In the world of finance, we often encounter terms like margin, especially in the context of futures contracts and options. But what exactly does this term mean? Simply put, ...

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