Derivatives, Futures & Options
3 terms
American Option
Derivatives, Futures & Options
qualitative
An option that may be exercised at any time up to and including its expiry date.
Test: the holder may exercise on any trading day up to expiry, and the writer may be assigned at any time
Arbitrage
Derivatives, Futures & Options
₹
Simultaneously buying and selling equivalent assets in different markets to lock in a price difference without directional risk.
Test: the combined position has offsetting exposures, so the profit is fixed at inception regardless of the underlying's movement
At the Money
Derivatives, Futures & Options
qualitative
An option whose strike is at or nearest to the current price of the underlying.
Test: Strike is equal to, or the listed strike closest to, the current Spot price