Floor: Difference between revisions
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''Options trading and hedging'' | 1. ''Options trading and hedging''. | ||
An option hedging structure which effectively establishes a minimum worst case hedged rate or price for a cash inflow or an asset, while allowing the holder of the floor to retain the potential benefit of favourable higher market rates or prices. | An option hedging structure which effectively establishes a minimum worst case hedged rate or price for a cash inflow or an asset, while allowing the holder of the floor to retain the potential benefit of favourable higher market rates or prices. | ||
2. | 2. ''Options trading and hedging''. | ||
The option bought in order to establish the floor hedging structure. | The option bought in order to establish the floor hedging structure. | ||
3. | 3. ''Options trading and hedging''. | ||
The same option, regardless of the motivation for buying or selling it. | The same option, regardless of the motivation for buying or selling it. | ||
4. | |||
Any other structure resulting in a minimum value, rate or price, or the resulting value, rate or price itself. | |||
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* [[Interest rate floor]] | * [[Interest rate floor]] | ||
* [[Notional amount]] | * [[Notional amount]] | ||
* [[Output floor]] | |||
[[Category:Financial_products_and_markets]] | |||
[[Category:Manage_risks]] | |||
Latest revision as of 21:36, 2 December 2023
1. Options trading and hedging.
An option hedging structure which effectively establishes a minimum worst case hedged rate or price for a cash inflow or an asset, while allowing the holder of the floor to retain the potential benefit of favourable higher market rates or prices.
2. Options trading and hedging.
The option bought in order to establish the floor hedging structure.
3. Options trading and hedging.
The same option, regardless of the motivation for buying or selling it.
4.
Any other structure resulting in a minimum value, rate or price, or the resulting value, rate or price itself.
