Option
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Understanding and Executing Negative Basis Trades
It always seems like there is a trade du jour that certain market conditions, new products, or security liquidity issues can make particularly profitable. The negative basis trade has represented su
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Understanding Leads and Lags in International Trade: A Comprehensive Guide
What Are Leads and Lags? Leads and lags in international business most commonly refer to the alteration of normal payment or receipts in a foreign exchange transaction based on an expected chan
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Cash-and-Carry Trade: Understanding the Arbitrage Strategy
What Is a Cash-and-Carry Trade? A cash-and-carry trade is an arbitrage strategy that exploits the mispricing between the underlying asset and its corresponding derivative. The key to profiting
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BBSW: Understanding the Bank Bill Swap Rate in Australia
What Is the Bank Bill Swap Rate (BBSW)? The Bank Bill Swap Rate (BBSW), or Bank Bill Swap Reference Rate, is a short-term interest rate used as a benchmark for the pricing of Australian do
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Calendar Spreads: Understanding Options & Futures Strategies
What Is a Calendar Spread? A calendar spread is an options or futures strategy established by simultaneously entering a long and short position on the same underlying asset but with different d
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Cboe Options Exchange: Leading Global Options Trading Platform
What Is the Cboe Options Exchange? Founded in 1973, the Cboe Options Exchange is the worlds largest options exchange with contracts focusing on individual equities, indexes, and inter
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Understanding Quality Spread Differential (QSD) in Interest Rate Swaps
What Is Quality Spread Differential (QSD)? Quality spread differential (QSD) is used to calculate the difference between market interest rates that two parties potentially entering into an inte
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Long Put Options: A Comprehensive Guide for Investors
What Is a Long Put? A long put refers to buying a put option, typically in anticipation of a decline in the underlying asset. The term long here has nothing to do with the length of time before
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Securitization Explained: How Assets Become Investable Securities
What Is Securitization? Securitization is the procedure where an issuer designs a marketable financial instrument by merging or pooling various financial assets into one group. The issuer then
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Understanding Time Decay in Options Trading
What Is Time Decay? Time decay is a measure of the rate of decline in the value of an options contract due to the passage of time. Time decay accelerates as an options time to expiration d
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CME Globex: The Leading Electronic Trading Platform for Derivatives
What Is Globex? Globex is an electronic trading platform—the first of its kind when it launched in 1992—used for derivatives like futures, options, and commodity contracts across a wide range o
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Understanding Put Options: A Comprehensive Guide
What Is a Put? A put is an options contract that gives the owner the right, but not the obligation, to sell a certain amount of the underlying asset, at a set price within a specific time. The
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Understanding Settlement Price: Definition & Significance
What Is the Settlement Price? The settlement price, typically used in the mutual fund and derivatives markets, is the price used for determining a positions daily profit or loss as well as the
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Understanding Synthetic Financial Instruments: A Comprehensive Guide
What Is Synthetic? Synthetic is the term given to financial instruments that are engineered to simulate other instruments while altering key characteristics, like duration and cash flow. K
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Understanding European Options: Definition & Key Features
What Is a European Option? A European option is a version of an options contract that limits execution to its expiration date. In other words, if the underlying security such as a stock ha
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Cross-Currency Swaps: Definition, How They Work & Applications
What Is a Cross-Currency Swap? Cross-currency swaps are an over-the-counter (OTC) derivative in a form of an agreement between two parties to exchange interest payments and principal
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Derivatives for Risk Management: A Balanced Perspective
If you are considering a stock investment and read the company uses derivatives to hedge some risk, should you be concerned or reassured? Warren Buffetts stand is famous: He has attacked all de
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Implied Correlation Index (ICI): Understanding Market Relationships
What Is the Implied Correlation Index? The Implied Correlation Index is a financial benchmark published by the Chicago Board Options Exchange (CBOE) that tracks the correlation between implied
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Understanding Bond Tranches: Risk, Reward, and Investment
What Are Tranches? Tranches are segments created from a pool of securities—usually debt instruments such as bonds or mortgages—that are divvied up by risk, time to maturity, or other characteri
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Understanding Derivatives: Contracts Based on Underlying Assets
What Is a Derivative? A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset (like a security) or set of assets (like an index)
Option
- Condor Spread Strategy: A Guide for Volatile Markets
- International Investment: A Strategy for Risk Management
- Option Theta Explained: A Guide for Option Traders
- Rugby & Options Trading: Finding Strategy in Complexity
- Commodity Options Investing: Avoiding Common Pitfalls
- Call Options: A Beginner's Guide to Profitable Buying Strategies
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Distribution-in-Kind Explained: Understanding Non-Cash PaymentsDistribution-in-kind, also known as a distribution-in-specie, is a payment that is not made in cash. Instead, it is a payment that can be made in the form of physical goods or any other financial inst...
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Understanding Residential Leases: A Comprehensive GuideWhen you lease a home, you sign a rental agreement to live there. An executed lease is a legal document that includes your information, the property owner's information, rental terms and signature...
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Unemployment Benefits vs. Previous Wages: Are Americans Earning More on Unemployment?Boosted unemployment benefits are gi...
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Signature Guarantee: Selling Securities & Preventing FraudHow to Get a Signature Guarantee Investors sometimes hold securities in a physical form such as paper stock certificates. You must get a signature guarantee before you can sell or transfer ow...