Sentences with phrase «selling the underlying asset in»

The key idea behind the model is to hedge the option by buying and selling the underlying asset in just the right way and, as a consequence, to eliminate risk.

The key financial insight behind the equation is that one can perfectly hedge the option by buying and selling the underlying asset in just the right way and consequently «eliminate risk».

Not exact matches

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.

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.

As I understand it, in the USA it is illegal to short (sell) an underlying asset without a counter-party that lends the asset (naked) for the sale.

The intrinsic value is an easy calculation - the market price of an option minus the strike price - and it represents the profit that the holder of the option would enjoy if he or she exercised the option, took delivery of the underlying asset and sold it in the current marketplace.

The problem is that robos tend to include more «esoteric» funds, ones that not only trade with a larger spread between bid and ask prices (translation: higher cost to you), but also trade at a discount or premium to the underlying assets in the ETF (translation: higher costs to you if the manager buys at a premium or sells at a discount to asset value).

When the underlying assets in a mutual fund are sold, earnings are subject to capital gains tax.

As an example, for an index fund, assets may get liquidated if the underlying index changes in composition, thus requiring the manager to sell some stocks and purchase others.

The price at which you buy and sell units reflects the underlying value of the infrastructure assets in which you have invested.

They are formed by combining two or more options in the form of legs under which option contracts are bought and sold equally, but with different strike prices, sometimes different expiration dates and also different underlying assets.

Vertical spreads, in particular, are the spreads in which one option is bought and the other is sold simultaneously, with same underlying asset and same expiration date, but different strike prices.

Options contracts are priced solely by the trading price of the underlying asset, so even if your multiple account trading could only at best break even when you sell your final holdings (basically resetting the price to where it was because you started distorting it), this is fine because your real trade is in the options market.

The first is the liquidity of the ETF itself (how easy it is to buy or sell it); the second is the liquidity of the underlying assets in the ETF.

An option contract that gives you the right to sell (but does not lock you into selling) the underlying asset at a specified price, at or before a certain time in the future.

ETFs can take advantage of their two - tier structure (market makers create and redeem shares in exchange for the underlying assets, then sell / buy those shares to / from you) to essentially eliminate «capital gains distributions» (those pesky annual payouts that a fund is required to make when it sells its underlying assets at a profit as part of share redemption or asset rebalancing).

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).

If a fund is unable to effect a closing purchase transaction with respect to options it has written, it will not be able to sell the underlying securities or dispose of assets earmarked or held in a segregated account until the options expire or are exercised.

If the fund is unable to effect a closing purchase transaction with respect to options it has written, it will not be able to sell the underlying securities or dispose of assets earmarked or held in a segregated account until the options expire or are exercised.

In the case of a share option, one party, the holder of the option, pays a premium to obtain the right to purchase (or sell) an underlying asset — a quantity of ordinary shares.

Options trading is a form of derivative trading in which people trade contracts that give them the rights (but not obligation) to buy or sell an underlying asset at a predetermined price.

You can't «sell» in the cash markets if you don't already own the underlying asset.

A futures contract is simply a contract to buy or sell a financial instrument or other underlying asset at a predetermined price in the future.

Currently the $ 1 trillion CDO market is largely illiquid, and even if assets underlying a CDO are worth 80 cents on the dollar, they will sell for 40 cents in a fire - sale market.