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Derivatives

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  • July 25, 2021
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Log Contract

An exotic option (specifically a single-payout option) that makes payments based on the logarithm of the price of its underlying asset. In other words, it represents a contingent payout whose value at expiration is equal to the natural logarithm of the underlying asset’s price. That means, the payoff of the log contract option is a nonlinear function of the price of a single asset. This type of options enables investors to trade views on future volatility. It always remains at the money.


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