NISM Series XIII Common Derivatives Certification Exam Notes

Page 138 Of 303

Go to:

  • Black (1976) Model: Uses forward prices instead of spot; suited for futures options.
  • Implied Volatility (IV): Market's forecast of volatility; derived from option prices.
  • Payoff Diagrams:Long Call: Limited loss (premium), unlimited profit.Short Call: Limited gain (premium), unlimited loss.Long Put: Limited loss (premium), profit if price drops.Short Put: Limited gain (premium), loss if price falls sharply.
  • Break-Even Point:Call: Strike price + premium.Put: Strike price − premium.
  • Square-Off: Option positions can be closed before expiry to realize gain/loss.
Previous
Next

NISM Common Derivatives

Free Demo
Buy Premium
MODELEXAM MODELEXAM®
Developed by Realsoft Infoplanwww.realsoftinfoplan.com