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Equity options are the most common type of equity derivative. [1] They provide the right, but not the obligation, to buy (call) or sell (put) a quantity of stock (1 contract = 100 shares of stock), at a set price (strike price), within a certain period of time (prior to the expiration date).
While the performance bond requirements vary from broker to broker, the CME requires $11,500 to maintain the position. [2] E-Mini S&P 500 Futures (ticker: ES) contract's minimum tick is 0.25 index points = $12.50 [1] Micro E-Mini S&P 500 Futures (ticker: MES) contract's minimum tick is 0.25 index points = $1.25
A credit default swap index is a credit derivative used to hedge credit risk or to take a position on a basket of credit entities. Unlike a credit default swap, which is an over the counter credit derivative, a credit default swap index is a completely standardized credit security and may therefore be more liquid and trade at a smaller bid–offer spread.
A derivative's value depends on the performance of the underlying item, such as a commodity (for example, corn or oil), a financial instrument (e.g. a stock or a bond), a price index, a currency, or an interest rate.
Financial modeling is the task of building an abstract representation (a model) of a real world financial situation. [1] This is a mathematical model designed to represent (a simplified version of) the performance of a financial asset or portfolio of a business, project, or any other investment.
Statements of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, commonly known as FAS 133, is an accounting standard issued in June 1998 by the Financial Accounting Standards Board (FASB) that requires companies to measure all assets and liabilities on their balance sheet at “fair value”.
Dividend futures can be on a single company, [1] a basket of companies, or on an Equity index. [2] They settle on the amount of dividend paid by the company, the basket of companies, or the index during the period of the contract. For example, if company A pays a quarterly dividend of $0.25 in 2012.
In April 2002, the index was announced with the publication of Whaley's "Return and Risk of CBOE Buy-Write Monthly Index" in Journal of Derivatives (Winter 2002). Investors have used covered call strategies for more than three decades. As noted in a magazine article “Buy Writing Makes Comeback as Way to Hedge Risk.”