Floor: Difference between revisions
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imported>Doug Williamson m (Spacing 27/8/13) |
imported>Doug Williamson (Expand.) |
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''Options trading and hedging | ''Options trading and hedging'' | ||
1. | |||
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. | |||
The option bought in order to establish the floor hedging structure. | |||
3. | |||
The same option, regardless of the motivation for buying or selling it. | |||
Revision as of 21:53, 12 November 2016
Options trading and hedging
1.
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.
The option bought in order to establish the floor hedging structure.
3.
The same option, regardless of the motivation for buying or selling it.
