July 2009
Beginner
444 pages
14h 1m
English
book
An Introduction to International Capital Markets: Products, Strategies, Participants, Second Edition
by Andrew M. Chisholm
Content preview from An Introduction to International Capital Markets: Products, Strategies, Participants, Second Edition
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.
20
Additional Option Applications
20.1 CHAPTER OVERVIEW
Previous chapters have looked at option valuation and risk measures as well as key option strategies. In the current chapter these concepts are applied to currency (foreign exchange) and interest rate options as well as to convertible bonds. The chapter explores how currency options can be used to manage foreign exchange exposures. It considers how exchange-traded contracts operate. It outlines how the Black-Scholes option pricing model is commonly adapted to price currency options. The chapter then considers how interest rate options are quoted and traded and how they are used to manage interest rate exposures. Specific products reviewed are caps and ‘caplets’; floors and ‘floorlets’; interest rate collars; options on short-term interest rate futures; and swaptions, which are options to buy or sell interest rate swaps. Trading and hedging applications of these various products are explored. A summary is provided of hedging or trading strategies (using cash or derivative products) that might be implemented for different interest rate forecasts. Finally, the chapter explains the basic structure and applications of convertible bonds (CBs) including convertible arbitrage trades.
20.2 OTC AND EXCHANGE-TRADED CURRENCY OPTIONS
A currency or FX option is the right but not the obligation:
• to exchange two currencies;
• on the expiry date (on or before the expiry date in the case of an American option);
• at a fixed rate of exchange. ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Read now
Unlock full access
More than 5,000 organizations count on O’Reilly
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.Julian F.
I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.Addison B.
I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.Amir M.
I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.