Details Title: Fin 220 Description: Chapter 19: Derivative Markets Total Flash Cards: 19 Created: 12/14/2008 11:19:09		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Finance Flashcards
Cards in this set: Term Call Option Definition Owner has right to purchase asset at specified price Term Exercise (Strike) Price Definition Price to purchase asset for on or before expiry Term Put Option Definition Owner has right to sell asset at specified price Term In, Out, At The Money Definition In the money yields profits, out yields loss, at is break even Term American Option Definition Allows holder to exercise option on or before expiry date Term European Option Definition Owner can only exercise option at expiry date Term Protective Put Definition Buy a put option on owned stock, if it drops below a certain level, exercise the put Term Covered Call Definition Sell a call option on owned stock, if it drops or stays flat you collect premium, if it rises your gains are capped at option price Term Straddle Definition Buy a put and a call on stock you own, expecting the stock to go up or down a lot soon Term Spread Definition Buying 2 calls or 2 puts, either of varying exercise prices or expiry dates Term Collar Definition Brackets value of portfolio between two bounds, sell a call to buy a put, protected if stock drops but limited if it gains Term Warrant Definition Like a call option, firms issue these, when exercised stock is created rather than cash Term Exotic Options Definition Lookback, currency translated, digital, asian, barrier Term Value of Option Definition Made up of time value, intrinsic (in the money), volatility Term Options Clearing Corporation Definition Deals with the clearing of old options and issuance of new options Term Largest Options Market Definition Chicago Term Naked Call vs. Covered Call Definition Naked has no stock, covered equals amount of stock owned Term Freaky Friday Definition Third Friday of march, June, September, December; options, futures, indexes all expire at the same time Term Derivative vs. Primitive Definition Derivative is option, primitive is stock