At the money
Out of the money
Out of the money
‘Out of the money’ is one of three terms used to describe an option’s value, or ‘moneyness’. The other two terms are ‘at the money ‘ and ‘in the money’. When an option is out of the money, its strike price — that is, the price at which you’d exercise the option — is lower than the market price.
A participating forward is a Hybrid FX Forward and Option instrument. The amount you want to protect — or hedge — is split into two parts. One part works like a standard forward contract. In other words, you enter a legal obligation to exchange a specified amount of foreign currency on a certain date at a specified rate.
A ratio forward is a type of structured, or ‘exotic’ option. Exotic options are derivative contracts in which two or more options are combined to create a more complex arrangement.
A straddle is a strategy that traders typically use when they want to bet on the price of an asset but aren’t sure if it’s likely to go up or down — if they are buying the straddle, or have a high conviction that the price will remain stable — if they sell the straddle.
US Dollar Index
Volatility is a measure of how much the price of an instrument moves. It is usually expressed as an annualised %. It is often calculated as the standard deviation of the daily moves in price of an asset from its average.
A warrant is a type of derivative : a financial instrument that gets its value from an underlying commodity. In foreign exchange transactions, the underlying commodity is a currency pair.
Yield is how much you’ve earned or can expect to earn from an investment over a specific period of time, expressed as a percentage of the amount you originally invested or your investment’s current market value.
The letter Z will be published on the 3rd of December.
High Risk Investment Notice
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