Sentences with phrase «future price of the underlying asset»

When you trade CFDs you're essentially speculating on the future price of the underlying asset, unlike traditional shares trading you don't physically own the asset.

Not exact matches

The expected future volatility of the underlying asset is one of the most important determinants of the option price.

Futures are used to either hedge or speculate on the price movement of an underlying asset, such as a physical commodity or financial instrument.

For every investable asset — publically traded or otherwise — the underlying value of the asset is the sum of the discounted future cash flows, and risk comes from paying too high a price for those cash flows.

Large market participants bid up the price of bitcoin in the weeks prior to the CBOE launch, loading up on the underlying asset and then offsetting that exposure by shorting futures.

In particular, futures and forwards provide information about the expected future price and options provide information about the volatility and risk associated with the price of the underlying asset.

The value of a derivative depends on the value of its underlying asset, thus by predicting the future price of the asset, the future price of the derivative contract can be judged and traded on.

Conversely, if the price of an underlying asset is expected to fall, some may sell the asset in a futures contract and buy it back later at a lower price on the spot.

Futures can be used to hedge or speculate on the price movement of the underlying asset.

If market participants anticipate an increase in the price of an underlying asset in the future, they could potentially gain by purchasing the asset in a futures contract and selling it later at a higher price on the spot market or profiting from the favorable price difference through cash settlement.

If you sell a Naked Call or Put Option, you should have underlying assets or an open position in the futures market to protect you from an unlimited loss arising out of adverse price movements.

Investing in commodities indices that are constructed using long or short positions in futures on physical commodities whose value is determined based on the price of the underlying physical commodity plus yield and that trade on public markets that provide adequate liquidity and transparency, with negligible costs and no storage deterioration risk, offer a practical method to gaining commodities exposure and can provide a means for market participants to access the five components of the returns of the asset class.

Contracts on the price of real estate include predictions of the future value of the underlying asset.

«Puts» give the buyer the right, but not the obligation to sell a given quantity of underlying asset at a given price on or before a given future date.

Namely, backwardation is the idea that the price of a futures contract for some future delivery of the underlying asset is lower than the current spot price.

Forecasting future asset price appreciation is tougher, but the point is, understanding the underlying cash flow dynamics of a company is just as important as it is for housing purchases.

The Black — Scholes formula has only one parameter that can not be directly observed in the market: the average future volatility of the underlying asset, though it can be found from the price of other options.

Here the price of the futures is determined by today's supply and demand for the underlying asset in the future.

Futures traders are traditionally placed in one of two groups: hedgers, who have an interest in the underlying asset (which could include an intangible such as an index or interest rate) and are seeking to hedge out the risk of price changes; and speculators, who seek to make a profit by predicting market moves and opening a derivative contract related to the asset «on paper», while they have no practical use for or intent to actually take or make delivery of the underlying asset.

In this case, the futures contract (purchase or sale) is settled at the closing price of the underlying asset as on the expiry date of the contract.

Future contracts that use the price of a single stock as the underlying asset are called single stock futures (SSFs).

If, on the other hand, the spread between a future traded on an underlying asset and the spot price of the underlying asset was set to widen, possibly due to a rise in short - term interest rates, then an investor would be advised to sell the spread (i.e. a calendar spread where the trader sells the near - dated instrument and simultaneously buys the future on the underlying).

It requires the delivery of the underlying asset at a specified price and specified future date.

Trading of derivatives like futures also serves to move volatility away from the underlying asset and ultimately causes prices to become more predictable overall.

As futures are designed to balance out price fluctuations of underlying assets, it could also make the price of Bitcoin less volatile.

We're willing to bet that the number of participants that will enter based on the former altered situation is far smaller than the number that will enter based on the latter (i.e., the number of longs is going to dramatically outweigh the number of shorts) and, in turn, the net impact of a bitcoin futures market on the price of the underlying asset will be very much bullish.

In fact, just as the futures markets opened for the first time, the market price of Bitcoin on Coinbase jumped from $ 14,810 to $ 16,171 in a matter of minutes, demonstrating that, despite light volume, the futures prices may have some effect on its underlying asset.