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The ratio of the dollar price change in the price of an option to a 1% change in the expected price volatility.
Knockin Option
An option that “comes to life” when a trigger event occurs. Typically when a price crosses a particular barrier it pulls the trigger.
Knockout Option
An option that “dies” when a trigger event occurs. Typically when a price crosses a particular barrier it pulls the trigger.
An option strategy that achieves its maximum potential if the underlying security rises far enough, and has its maximum risk if the security falls far enough. An option with a lower striking price is bought […]
Applies to derivative products. Option strategy consisting of both puts and calls at different strike prices to capitalize on a narrow range of volatility. The payoff diagram takes the shape of a bird. See also […]
Haircut The margin or difference between the actual market value of a security and the value assessed by the lending side of a transaction (ie. a repo). Hamster Option A form of Range Option that […]
