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The amount of liquidity you have available to buy securities is called buying power. It’s also known as excess equity, and refers not only to the cash available for buying assets but also the ...
For an MBS, the word "option" in option-adjusted spread relates primarily to the right of property owners, whose mortgages back the security, to prepay the mortgage amount. Since mortgage borrowers will tend to exercise this right when it is favourable for them and unfavourable for the bond-holder, buying an MBS implicitly involves selling an ...
Profit diagram of a box spread. It is a combination of positions with a riskless payoff. In options trading, a box spread is a combination of positions that has a certain (i.e., riskless) payoff, considered to be simply "delta neutral interest rate position".
In finance, a spread trade (also known as a relative value trade) is the simultaneous purchase of one security and sale of a related security, called legs, as a unit.Spread trades are usually executed with options or futures contracts as the legs, but other securities are sometimes used.
TradingView is a social media network, analysis platform and mobile app for traders and investors. The company was founded in 2011 and has offices in New York and London. [2]
The Z-spread of a bond is the number of basis points (bp, or 0.01%) that one needs to add to the Treasury yield curve (or technically to Treasury forward rates) so that the Net present value of the bond cash flows (using the adjusted yield curve) equals the market price of the bond (including accrued interest). The spread is calculated iteratively.
In the course of trading and investing, Tier 1 investment banks generate counterparty EPE and ENE (expected positive/negative exposure). Whereas historically, this exposure was a concern of both the Front Office trading desk and Middle Office finance teams , increasingly CVA pricing and hedging is under the "ownership" of a centralized CVA desk .
In finance, a spread option is a type of option where the payoff is based on the difference in price between two underlying assets. For example, the two assets could be crude oil and heating oil; trading such an option might be of interest to oil refineries, whose profits are a function of the difference between these two prices.