## Hedging

Hedging Meaning Hedging is a risk management strategy. It deals with reducing the risk of uncertainty related to the adverse price fluctuations in an asset. The aim of this …

Hedging Meaning Hedging is a risk management strategy. It deals with reducing the risk of uncertainty related to the adverse price fluctuations in an asset. The aim of this …

Strangle is a delta neutral trading strategy which pays off only with a large movement in the underlying market price. It consists of taking positions in call and put …

Strip A strip is delta negative trading strategy. Being delta negative implies that the value of the strip position increases when the price of the underlying security goes down.

Option straddle is a delta neutral trading strategy which pays off when the movement in the underlying market price is large enough to counter the combined premium of the …

A butterfly is a complex and low-risk trading strategy involving four options. The long trader buys two options at different strike prices and sells two options at the same …

Options are risky instruments because a small movement in the underlying price translates into a large percentage change in the options’ prices. They are ideal for high-risk traders. But …

A bear spread is a bearish trading strategy with limited risk and reward for the buyer. As with a bull spread, the upside and downside of a bear spread …

A swap is a derivative instrument where the two contracting parties agree to exchange a set number of cash flows from the financial instruments owned by both the parties for …

An exotic option is an over the counter (OTC) option which is more complex than commonly traded plain vanilla options in terms of the option behaviour with respect to …

Asset backed securities (ABS) are debt instruments collateralised by a variety of loans and obligations. These obligations usually include student loans, credit card receivables, auto loans, home equity loans …

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