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Derivatives

Extrinsic Value

The intrinsic value is the inherent value of an option determined by its underlying asset's current price. This means that the extrinsic value is influenced by factors such as time until expiration, volatility, and interest rates.

Understanding the concept of extrinsic value is crucial for investors in the realm of finance. It refers to the additional value that an option holds beyond its intrinsic price, which is based on the underlying asset's current market price. In simpler terms, it is the premium that investors are willing to pay for the potential future profits of the option. However, this value is not set in stone and is subject to various external factors such as time, volatility, and interest rates.

Out-of-the-money

An option that would result in a loss upon immediate exercise is known as an out-of-the-money option. Specifically, a Call option is considered out-of-the-money when the cur...

Long Hedge (Futures)

A long hedge refers to a strategy where an investor takes a long position on a futures contract. This is commonly utilized by hedgers who plan to purchase an asset in the fu...

In the world of finance, the concept of derivatives is a crucial one to understand. Essentially, derivatives are financial instruments that derive their value from underlyin...

It is an essential concept in financial markets. As we dive into the world of finance, it's important to understand the concept of convergence. This term refers to the grad...

A call option grants the holder the right, but not the obligation, to purchase a stock at a predetermined price during a specific timeframe. It is commonly used by investors...

Covered Call Option Writing

In this particular trading approach, the investor maintains ownership of a security for a prolonged period while also selling a call option on that same security. This allow...

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Currency

All terms related to the system of money in general use in a particular country, representing a medi

IPO

All terms and concepts related to the process in which a private company offers its shares to the pu

Fixed Income

Investments that provide regular, fixed payments, such as bonds and treasury bills.

Gold

All terms and concepts related to the precious metal gold, including its price, trading, investment,

Financial Terms

A comprehensive resource containing definitions and explanations of terms, concepts, and jargon used

Options and Futures

All terminologies and concepts related to financial derivatives, including options and futures contr

Public Offerings

All terms related to a company selling its shares or bonds to the public for the first time (IPOs) o

Fixed Income Instruments

All terms related to investments like bonds or treasury bills that provide regular, fixed payments,

Bank Deposits

All terms and concepts related to the placement of money in a bank account, including savings accoun

Financial Instruments

Legal contracts that represent financial value, such as stocks, bonds, options, futures, and various

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