Clearing house plays an important role for clearing of derivatives trades to reduce credits risks involved in the trade. Clearing house provides clearing and settlement services for mainly derivatives and securities transactions. Clearing house helps to clear a trade for two clearing participants in order to reduce risk, especially Credit risk. Clearing house reduces risk […]Continue Reading... Comments Off on Clearinghouse or CCP
After the 2008 subprime crisis and near-collapse of the U.S. economy due to improper use of complex derivatives and subprime loans in the housing market, US Congress has passed the Dodd-Frank Financial Regulatory Reform Bill on 30th June 2010 which was named after Senator Christopher J. Dodd and U.S. Representative Barney Frank. The Senate approved […]Continue Reading... Comments Off on Dodd-Frank Financial Regulatory Reform Bill
It is a type of fund that is designed to replicate the benchmark indexes which are S&P, DowJones, Sensex, Nifty etc. Most popular index fund is Standard & Poor 500 index which tracks 500 US listed companies from various industries. It can be done by selecting the same member securities which constitute the benchmark index […]Continue Reading... Comments Off on Index Funds
Buy Put Option Put options buyers get the right to sell an underlying index or security at a particular price (same as strike or exercise price) on a particular date (expiry date). The put writer has to buy the asset at that price if the put buyer exercises the option. As the put buyer owns […]Continue Reading... No Comments.
Buy Call Option Call options buyers get the right to buy an underlying index or security at a particular price (same as strike or exercise price) on a particular date (expiry date). The call writer has to sell the asset at that price if the call buyer exercises the option. As the call buyer owns […]Continue Reading... No Comments.