Introduction to Derivatives

Introduction to Derivatives Introduction to Derivatives Table of Contents What is Derivative? A derivative is a contract between two or more parties whose value is based on an agreed-uponunderlying financial asset, index or security. Futures contracts, forward contracts, options, swaps, and warrants are commonly usedderivatives. Derivatives can be used to either mitigate risk (hedging) or […]

Long Call Synthetic Straddle

Long Call Synthetic Straddle Long Call Synthetic Straddle Table of Contents Basics Concepts – Long Call Synthetic Straddle Description – Long Call Synthetic Straddle Straddles can be created “synthetically”—in other words, instead of buying calls and puts together, we create the same risk profile by combining calls or puts with a long or short position […]

Synthetic Call

Synthetic Call Synthetic Call Table of Contents Basics Concepts – Synthetic Description – Synthetic Call An insurance policy for covering a short position, the Synthetic Call is the opposite of a Synthetic Call. Basically, we short the stock and buy an ATM or slightly OTM (higher strike) call. The net effect is that of creating […]