Welcome To Options Trading For Newbies
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- RISK-FREE RATE
| PUT RATIO BACKSPREAD - Along backspread using puts only. REALIZED GAINS AND LOSSES - The profit or losses received or paid when a closing transaction is made and matched together with an opening transaction. REVERSAL - A short position in the underlying protected by a synthetic long. RHO - The change in the value of an option with respect to a unit change in the risk- free rate. !34 RISK-FREE RATE - The term used to describe the prevailing rate of interest for securities issued by the government of the country of the currency concerned. It is used in the pricing models. ROLLOVER - Moving a position from one expiration date to another further into the future. As the front month approaches expiration, traders wishing to maintain their positions will often move them to the next contract month. This is accomplished by a simultaneous sale of one and purchase of the other. ROUND TURN - When an option contract is bought and then sold (or sold and then bought. The second trade cancels the first, leaving only a profit or loss. This process is referred to as around turn. Brokerage charges are usually quoted on this basis. SHORT - An obligation to purchase an asset at sometime in the future. You are short if you have sold more than you have bought in any particular market, commodity, instrument, or contract. Also known as having a short position. An asset is sold short with the expectation of a decline in its price. Can have almost unlimited risk. Uncovered short positions require margin. Download 1.29 Mb. Share with your friends:
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