151. Expiration date: the
date which is specified in the option contract is called expiration date.
152. European option: it is
the option at exercised only on expiration date it self.
153. Basis: basis
means future price minus spot price.
154. Cost of carry: the
relation between future prices and spot prices can be summarized in terms of
what is known as cost of carry.
155. Initial margin: the
amount that must be deposited in the margin a/c at the time of first entered
into future contract is known as initial margin.
156 Maintenance margin: this
is some what lower than initial margin.
157. Mark to market: in
future market, at the end of the each trading day, the margin a/c is adjusted
to reflect the investors’ gains or loss depending upon the futures selling
price. This is called mark to market.
158. Baskets :
basket options are options on portfolio of underlying asset.
159. Swaps: swaps
are private agreements between two parties to exchange cash flows in the future
according to a pre agreed formula.
160. Impact cost:
impact cost is cost it is measure of liquidity of the market. It reflects the
costs faced when actually trading in index.
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