Derivatives, Futures & Options
10 terms
Calendar Spread
Writing an option in a nearer expiry and buying the same strike in a further expiry, or the equivalent in futures.
Derivatives, Futures & OptionsCall Option
An option giving its buyer the right to buy the underlying at the strike price on or before expiry.
Derivatives, Futures & OptionsCash and Carry Arbitrage
Buying the underlying in the cash market while selling its futures, locking in the basis as a return.
Derivatives, Futures & OptionsCash Settlement
Settlement of a derivative by paying the cash difference between the contract price and the final settlement price.
Derivatives, Futures & OptionsCash-Secured Put
Writing a put while setting aside enough cash to buy the underlying if assigned.
Derivatives, Futures & OptionsCollar
Holding shares while buying a protective put and writing a call, funding the protection with the premium received.
Derivatives, Futures & OptionsContango
A condition in which futures prices are above the spot price, and later expiries are priced above nearer ones.
Derivatives, Futures & OptionsContract Value
The notional value of the underlying that one derivative contract controls.
Derivatives, Futures & OptionsCost of Carry
The net cost of holding the underlying until a derivative's expiry, comprising financing cost less any income received.
Derivatives, Futures & OptionsCovered Call
Writing a call option against shares already owned, so the delivery obligation is covered by the holding.