In: Finance
__________ requirements serve to insure the performance of futures contracts.
D. Margin |
B. Experience |
C. Age |
A. Income A put option is in the money if the strike price is __________ the market price of the underlying security.
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MARGIN requirements serve to insure the performance of futures contracts.
Margin in derivatives market means the amount of equity contributed by an investor as a percentage of the current market value of securities held in a margin account. Buyer pays only a % of asset value "margin" and rest is borrowed from bank or broker.
A. A put option is in the money if the strike price is greater than the market price of the underlying security.
A put option gives the owner right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time. Its value appreciates as the value of asset depreciates. Buyer of option basically is bearish about the asset and expects the price of underlying asset to fall in coming time period.
D. a $10 loss
With a short futures contract on oil with $40 barrel, trader
fixed his cost of selling at $40. However, market is now buying the
same at $50. Hence, the trae is at a loss of $10 with this
contract