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Contingent Premium Option

An option contract for which no premium is paid upfront by the buyer (long). However, a pre-specified premium should be paid if the option...

Capped Option

An option with an cap placed on payout or price, and which is automatically exercised when the underlying closes at or above (for a call)...

Interest Rate Caption

An option on a cap. In other words, a caption is an option to buy or sell an interest rate cap whereby the holder has...

Caption

An option on a cap. In other words, a caption is an option to buy or sell an interest rate cap whereby the holder has...

Low Exercise Price Option

A call option with an exercise price initially set deep in-the-money. Since it is highly likely that the option will...

LEPO

A low exercise price option, which is, by definition, a call option with an exercise price initially set deep in-the-money....

Pay Later Option

A type of binary options whose stated strike price is different from its payoff strike. That is, there is a...

Tail Hedge

An adjustment to the number of futures contracts used to hedge a position in an attempt to make the present market exposure...

Tailing The Hedge

In the context of futures contracts, it is a small adjustment that has to be made to the formula used...

Expiration Cycle

The dates on which options on a particular underlying expire. The expiration day of an option is the last day the option...