look up any word, like swoll:

Thesaurus for financial derivative

Synonyms, antonyms, and related words for financial derivative

(FINANCE) a financial derivative that entitles the owner to buy a fixed amount of X for a fixed price (the strike price) by a specific date in the future. If this is an equity derivative, X is referred to as the underlying stock.

A call option allows one to reap profits from an increase in price of a traded item without actually buying the asset itself. Since it is an option, one is not compelled to exercise it if it not advantageous to do so; however, the party that initially issued the option (i.e., the one who "wrote" the option) is legally obligated to honor the option.

When the strike price of a call option is more than the current market price of the asset (i.e., its "spot price"), then it has no intrinsic value and is "out of the money."
Buying a call option is one way to take a long position on the underlying asset.

Writing a call is a way to take a short position.
by Abu Yahya April 15, 2010
A period of time that you presently want to be in be in because of the wonderful theories and concepts envisioned. But when the future becomes the present, you'll wish it were still the past. because the theories and concepts either (a) never came true, (b) weren't worth the wait, or (c) really sucked.
I have seen the future. And it sucks horse-shit. And I'm not even a psychic.
by AYB October 27, 2003
(FINANCE) a situation in which an investor stands to gain if a particular investment instrument (stocks, bonds, gold, real estate) goes up in value. One "takes a long position" with respect to a particular item.

There are several ways of taking a long position; an obvious way to go long is to actually own the thing itself. Supposing you are taking a long position on Intel common stock (NASDAQ:INTC), here are some other ways:

* Buy a call option for INTC, especially with a strike price higher than the current spot price.

* Write a put option for INTC, committing yourself to buy more INTC stock if the price goes down over the near term

* Buy a futures contract for INTC at spot (or more).

CAVEAT LECTOR: there are many _potential_ definitions of long position; I have given the broadest one available.
MICHAEL: I want to flatten my long position on T-bills.

ANNA: I would recommend buying a covered interest swap with another major currency, like yen.
by Abu Yahya April 10, 2010
(FINANCE) a type of financial derivative; a certificate that gives the owner the right to buy (or sell) a fixed amount of a specific thing for a specific price (the strike price).

An option to buy something else is called a call option; an option to sell something else is called a put option. An option has a strike price, which is the price at which you are entitled to buy (or sell) the underlying commodity, or stock, or foreign currency, or whatever.

Options allow the owner to speculate in the possibility that market prices will change in a certain direction, without actually spending the value of the underlying item. For example, suppose WTI crude is $85.75/bbl. In order to make $1000 off of a $0.25 increase in the price, you ordinarily would need to own 4000 bbls of crude, which you can't afford. So, instead, you buy a call option for 4000 bbls with a strike price of $85.75/bbl (i.e., exactly what it is now). This option will cost a tiny amount of money. If the price goes up to $86.00/bbl, you don't own the oil, but your options are now worth $1000 to somebody who wants to buy that oil.

An option with intrinsic value (for example,a call option whose strike price is less than the spot price) is "in the money." An option with no intrinsic value is "out of the money."
BILL: So, options are just like gambling, am I right?

ANNA: For most people. But if you're already in the business of buying or selling a particular thing, an option can protect you against a bad price movement.

BILL: But options on stocks? I mean, unless a company wants to reward its own executives, or something?

ANNA: Well, you might need options on stocks to hedge risk, if you're a fund manager. That way you can focus on long-run investing.
by Abu Yahya April 04, 2010
(FINANCE) a tradable financial instrument that consists of a commitment to buy a fixed amount of X at a fixed price (known as a "strike price"). Put options are the opposite of a call option, in which ones to sell a fixed amount of X at strike.

Put options are useful to traders interested in covering risk. They guarantee a minimum price at which one can expect to sell one's holdings of X.

When the strike price of a put is less than the spot price, then it is "out of the money" and has no intrinsic value.
Buying put options is a way of shorting a stock; but it can also be used as a hedge against unpleasant surprises.
by Abu Yahya April 14, 2010
(FINANCE) a situation in which an investor owns financial instruments (shares, bonds, financial derivatives, etc.) that will make the most money IF some other thing declines in value.

Therefore, one always has to take a short position on something in particular. A short position on gold means the investor expects gold to decline in value in the near future, and has bought various things to make money if it does.

Some ways to take a short position on X include:

(1) buying a put option on X

(2) writing a call option on X

(3) borrowing X and selling it (shorting a stock)

#3 is the classical way to take a short position. It was dangerous because a skillful trader could squeeze the shorts using a corner.
BILL: I guess you took a bath when the stock market tanked, huh?

ANA: Nope. I took a short position on all of the nine largest banks. Did rather well, thank you very much.

BIL: Sweet!
by Abu Yahya April 05, 2010
(FINANCE) market price of a traded stock, commodity, currency, or bond at a specific point in time. For example, right now it's 5 April 2010 08:10 (GMT), and the spot price of WTI crude is $85.56/bbl. Spot price is the price at a specified time on a specific market.
The value of a derivative is determined by the relationship of its strike price to its spot price.
by Abu Yahya April 05, 2010
an applied field of economics used to evaluate relative opportunity cost for speculation by mathematical manipulation of currency figures
Scott, did you double check your calculations of finance? That estimation seems far too high!
by Funkwillyp May 02, 2009
(FINANCE) used to refer to an option that has no intrinsic value, given the prevailing spot price. The two obvious examples are the call option and the put option.

*If the strike price of a call option is greater than the current price (or "spot price") of the underlying stock, then there is no point in exercising the option.

*If the strike price of a put option is less than the spot price, then there is no point in exercising the option/

Please note that "having no intrinsic value" IS NOT THE SAME THING as "worthless." An option that is out of the money is not worthless, unless it is about to expire. Assuming there is a lot of time left on the option before it expires, there remains the possibility the spot price of the underlying item could move in a favorable direction, and make the option "in the money."
Buying a call option that is out of the money is a long position; buying a put option that is out of the money is a short position.
by Abu Yahya April 14, 2010
(FINANCE) on a financial derivative, the price at which the final transaction occurs. For example, the strike price of a call option is the price at which the owner of the option may buy the underlying item. If a call option is for 100 bbls of WTI crude oil at a strike price of $85.75/bbl, and the spot price is $86.50, then the option is worth (86.50 - 85.75) x 100 bbls = $75.
A put option is worthless if the strike price is lower than the spot price by the time it expires.
by Abu Yahya April 05, 2010