Risk transmission and Straddle: Difference between pages

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''Risk - systemic risk.''
''Options speculation''
A composite speculative deal in two options which results in profits from large changes in the underlying asset price, either up or down.
The straddle’s profit/loss profile is ‘V’ shaped.


Risk transmission is the spread of risk from one sector to another, or within a sector.
It is also sometimes known as a ''bottom straddle'' or a ''long straddle''.


A long straddle is constructed by simultaneously buying a call option and a put option with identical strike prices.


:<span style="color:#4B0082">'''''DeFi's channels of risk transmission'''''</span>
The opposite composite transaction - which is a mirror image of the ‘V’ shaped long straddle - is known as a ''top straddle'' or a ''short straddle''. This is the position taken by the seller of a conventional long straddle.


:"... we model a high-dimensional network of European CDS [Credit Default Swap] spreads to assess the transmission of credit risk
== See also ==
to the non-financial corporate sector.
* [[Option]]
* [[Speculation]]


:Our findings suggest a sectoral clustering in the CDS network, where financial institutions are located in the center and non-financial as well as sovereign CDS are grouped around the financial center.
:The network has a geographical component reflected in differences in the magnitude and direction of real-sector risk transmission across European countries.
:While risk transmission to the non-financial sector increases during crisis events, risk transmission within the non-financial sector remains largely unchanged."
:''Analyzing credit risk transmission to the non-financial sector in Europe: a network approach - European Systemic Risk Board - Working Paper 78, July 2018.''
==See also==
*[[Contagion]]
*[[Credit default swap]]
*[[Credit risk]]
*[[European Systemic Risk Board]]
*[[Sovereign]]
*[[Systemic risk]]
[[Category:The_business_context]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]

Revision as of 14:20, 23 October 2012

Options speculation. A composite speculative deal in two options which results in profits from large changes in the underlying asset price, either up or down. The straddle’s profit/loss profile is ‘V’ shaped.

It is also sometimes known as a bottom straddle or a long straddle.

A long straddle is constructed by simultaneously buying a call option and a put option with identical strike prices.

The opposite composite transaction - which is a mirror image of the ‘V’ shaped long straddle - is known as a top straddle or a short straddle. This is the position taken by the seller of a conventional long straddle.

See also