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  2. Bond option - Wikipedia

    en.wikipedia.org/wiki/Bond_option

    An American bond option is an option to buy or sell a bond on or before a certain date in future for a predetermined price. Generally, one buys a call option on the bond if one believes that interest rates will fall, causing an increase in bond prices. Likewise, one buys the put option if one believes that interest rates will rise. [1]

  3. Interest rate option - Wikipedia

    en.wikipedia.org/wiki/Interest_rate_option

    An interest rate option is a specific financial derivative contract whose value is based on interest rates. [1] Its value is tied to an underlying interest rate, such as the yield on 10 year treasury notes. Similar to equity options, there are two types of contracts: calls and puts.

  4. Valuation of options - Wikipedia

    en.wikipedia.org/wiki/Valuation_of_options

    In finance, a price (premium) is paid or received for purchasing or selling options.This article discusses the calculation of this premium in general. For further detail, see: Mathematical finance § Derivatives pricing: the Q world for discussion of the mathematics; Financial engineering for the implementation; as well as Financial modeling § Quantitative finance generally.

  5. Callable bond - Wikipedia

    en.wikipedia.org/wiki/Callable_bond

    By issuing numerous callable bonds, they have a natural hedge, as they can then call their own issues and refinance at a lower rate. The price behaviour of a callable bond is the opposite of that of puttable bond. Since call option and put option are not mutually exclusive, a bond may have both options embedded. [3]

  6. How implied volatility works with options trading

    www.aol.com/finance/implied-volatility-works...

    Market conditions: Major economic events — such as interest rate changes, unemployment data, market crashes or geopolitical tensions — can impact market volatility and, consequently, implied ...

  7. Monte Carlo methods for option pricing - Wikipedia

    en.wikipedia.org/wiki/Monte_Carlo_methods_for...

    For example, for bond options [3] the underlying is a bond, but the source of uncertainty is the annualized interest rate (i.e. the short rate). Here, for each randomly generated yield curve we observe a different resultant bond price on the option's exercise date; this bond price is then the input for the determination of the option's payoff.

  8. Black model - Wikipedia

    en.wikipedia.org/wiki/Black_model

    The Black formula is similar to the Black–Scholes formula for valuing stock options except that the spot price of the underlying is replaced by a discounted futures price F. Suppose there is constant risk-free interest rate r and the futures price F(t) of a particular underlying is log-normal with constant volatility σ.

  9. America is now paying more in gross interest on its record ...

    www.aol.com/finance/america-now-paying-more...

    The fiscal year starts Oct. 1, and in the first month the Treasury shelled out $88.9 billion in interest on its debt securities, while the Department of Defense spend $83.4 billion on military ...