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Dell and Intel. Instruments
such as bonds do not trade on a formal exchange
and are thus considered over-the- counter securities.
Most debt instruments are traded by investment banks
making markets for specific issues. If someone wants
to buy or sell a bond, they call the bank that makes
the market in that bond and ask for quotes. Many
derivative instruments such as forwards, swaps and
most exotic derivatives are also traded OTC. Intel.
Instruments such as bonds do not trade on a formal
exchange and are thus considered over-the- counter
securities. Most debt instruments are traded by
investment banks making markets for specific issues.
If someone wants to buy or sell a bond, they call
the bank that makes the market in that bond and
ask for quotes. Many derivative instruments such
as forwards, swaps and most exotic derivatives are
also traded OTC. |
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Out of the Money |
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This refers to options :
1) For a call, when an option's strike price is higher
than the market price of the underlying stock.
2) For a put, when the strike price is below the market
price of the underlying stock. Basically, an option that
would be worthless if it expired today.
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Over-Hedging |
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Locking in a price, such as through
a futures contract, for more goods, commodities or securities
that is required to protect a position.While hedging does
protect a position, over-hedging can be costly in the
form of missed opportunities. Although you can lock in
a selling price, over-hedging might result in a producer
or seller missing out on favourable market prices. |
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For example, if you entered into
a January futures contract to sell 25,000 shares of ‘Smith
Holdings’ at $6.50 per share you would not be able
to take advantage if the s pot price jumped to $7.00. |
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Overlay Strategy |
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A type of derivatives strategy.
This strategy is often employed to provide protection
from currencies or interest rate movements that are not
the primary focus of the main portfolio strategy. |
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Overweight |
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Refers to an investment position
that is larger than the generally accepted benchmark.
For example, if a company normally holds a portfolio whose
weighting of cash is 10%, and then increases cash holdings
to 15%, the portfolio would have an overweight position
in cash. |
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