Choose one derivative product: credit default swap, interest rate swap, currency swap, forwards, futures or any...

90.2K

Verified Solution

Question

Finance

Choose one derivative product: credit default swap, interestrate swap, currency swap, forwards, futures or any other derivativesecurity you found interesting.
definition of the instrument, simple explanation how theinstrument works, as well as description of potential investor`sprofiles (i.e who and why usually buy the instrument)

Answer & Explanation Solved by verified expert

4.5 Ratings (881 Votes)

Options Definition Options are derivative instruments that give the buyer the right but not the obligation to buy or sell the underlying asset at a predetermined price known as the Strike price or Exercise Price at a specified date in the futureknown as the expiry or the maturity date Since the buyer of an option has the right but not the obligation to buy or sell the underlying asset therefore to purchase this right the buyer has to pay the seller a price at the time of entering the contract known as the premium Before we understand how an option works we need to know about the two broad types of options Call OptionCall option is a type of option wherein the option buyer has the right and not the obligation to buy the underlying See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member