A cliquet definition is a type of financial contract that allows for periodic payments to be made to the holder, typically at set intervals. The payments are generally based on a predetermined formula, and the contract typically provides for a lump sum payment to be made at the end of the term. Cliquet definitions are … Read more
A credit spread option is an options trading strategy that involves buying and selling two options with different strike prices, but with the same expiration date. The options are usually put options or call options. The options are bought and sold in order to generate a credit, which is the difference between the premium of … Read more
A seagull option is an exotic options trading strategy that involves buying and selling three different options at three different strike prices. The seagull option gets its name from the shape of the payoff diagram, which resembles a seagull’s wings. The seagull option strategy is used when the trader believes that the underlying asset’s price … Read more
Option-adjusted spread (OAS) is the spread over treasuries that a security must offer in order to make it an attractive alternative to investing in treasury securities. The OAS of a security is calculated by adjusting the yield spread to account for the different options characteristics of the security. Option-adjusted spread is used in the pricing … Read more
The term “strap definition” refers to the process of determining the width of a particular options strike price range. This is done by taking the difference between the bid and ask prices of the options contract, and then dividing that number by the midpoint of the strike price range. The result is then multiplied by … Read more
An option series is a group of options contracts of the same type (i.e. put or call) that are created at the same time and have the same expiration date. All options in a series are identical in terms of the underlying security, strike price, and expiration date. What is advanced option strategy? There is … Read more
The gamma definition is the rate of change of a financial derivative’s delta with respect to the underlying asset’s price. Delta measures the amount by which the value of a derivative changes in relation to changes in the underlying asset’s price. Gamma measures the rate of change of a derivative’s delta. What is gamma scalping? … Read more
A fiduciary call is an options trading strategy that is used to protect gains in a stock or other asset. The strategy involves buying a call option on the asset, with the strike price set at the asset’s current market value. This limits the upside potential of the asset, but also protects against any downside … Read more
Assuming you are referring to the security concept: A hybrid security is a security that has characteristics of both equity and debt instruments. For example, a convertible bond is a bond that can be converted into equity at the holder’s option. Convertible bonds are often referred to as “hybrid securities” because they have features of … Read more
A synthetic call definition is an options trading strategy that involves combining a long put and a short call to create a position that behaves like a long call. The strategy is used when the trader believes the underlying asset will rise, but is unsure about the timing of the move. The long put provides … Read more
