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Derivatives, Futures & Options

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Derivatives, Futures & Options

European Option

An option that may be exercised only on its expiry date, not before.

Test: exercise is permitted only at expiry; the holder may still close the position by selling it in the market at any time qualitative Derivatives, Futures & Options

Expiry Date

The date on which a derivative contract ceases to exist and is settled.

Test: the contract's rights and obligations terminate at the close of the stated expiry day, with settlement at the closing reference price days Derivatives, Futures & Options

Exposure Margin

An additional margin charged on top of SPAN margin as a buffer against risks the scenario model does not capture.

Exposure Margin = a prescribed percentage of contract value, or a multiple of the underlying's volatility, whichever the exchange specifies ₹