Derivatives, Futures & Options
65 terms · page 2 of 3
Forward Contract
A privately negotiated agreement to buy or sell an asset at a set price on a future date, not traded on an exchange.
Derivatives, Futures & OptionsFutures Contract
A standardised exchange-traded agreement to buy or sell an underlying asset at a set price on a set future date.
Derivatives, Futures & OptionsGamma
The rate at which an option's delta changes for a one-unit change in the underlying.
Derivatives, Futures & OptionsHistorical Volatility
The realised standard deviation of an underlying's returns over a past period, annualised.
Derivatives, Futures & OptionsImplied Volatility
The volatility figure that, put into an option pricing model, reproduces the option's current market price.
Derivatives, Futures & OptionsIn the Money
An option that would have positive value if exercised immediately.
Derivatives, Futures & OptionsIndex Futures
A futures contract whose underlying is a stock market index rather than a single security.
Derivatives, Futures & OptionsInitial Margin
The deposit required before a derivative position can be opened, held as collateral against potential losses.
Derivatives, Futures & OptionsIron Condor
A four-leg position writing an out-of-the-money call and put while buying further out-of-the-money protection on both sides.
Derivatives, Futures & OptionsLong Call
A position created by buying a call option, with loss limited to the premium and gain rising as the underlying rises.
Derivatives, Futures & OptionsLong Put
A position created by buying a put option, with loss limited to the premium and gain rising as the underlying falls.
Derivatives, Futures & OptionsLot Size
The fixed number of units of the underlying that one derivative contract represents.
Derivatives, Futures & OptionsMark to Market
The daily revaluation of open derivative positions at the closing price, with gains and losses settled in cash.
Derivatives, Futures & OptionsMax Pain
The strike at which the total value of in-the-money options outstanding would be smallest at expiry.
Derivatives, Futures & OptionsMoneyness
The relationship between an option's strike price and the current price of the underlying.
Derivatives, Futures & OptionsOpen Interest
The total number of derivative contracts that remain open and have not been closed or settled.
Derivatives, Futures & OptionsOption
A contract giving its buyer the right, but not the obligation, to buy or sell an underlying at a set price by a set date.
Derivatives, Futures & OptionsOption Chain
A table listing all available strikes for an underlying and expiry, with prices, volumes and open interest for calls and puts.
Derivatives, Futures & OptionsOption Intrinsic Value
The value an option would have if exercised immediately, which is never less than zero.
Derivatives, Futures & OptionsOption Premium
The price paid by an option's buyer to its writer for the rights the contract confers.
Derivatives, Futures & OptionsOption Writer
The party that sells an option and takes on the obligation to perform if the holder exercises.
Derivatives, Futures & OptionsOut of the Money
An option that would have no value if exercised immediately.
Derivatives, Futures & OptionsPhysical Settlement
Settlement of a derivative by actual delivery of the underlying security against payment, rather than by cash difference.
Derivatives, Futures & OptionsProtective Put
Buying a put against shares already owned, to place a floor under the holding's value.