derivative-payoff

  1. Nicole Seaman

    P1.T3.21.9. Derivative payoffs

    Learning objectives: Calculate and compare the payoffs from hedging strategies involving forward contracts and options. Calculate and compare the payoffs from speculative strategies involving futures and options. Describe arbitrageurs' strategy and calculate an arbitrage payoff. Describe some of...
    • Nicole Seaman
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    • arbitrage-payoff arbitrageurs'-strategy derivative-payoff derivatives hedging-strategies payoffs speculative-strategies
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    • Forum: FRM® Practice Questions
  2. Nicole Seaman

    YouTube T3-01: Derivative Payoff/Profit Diagrams Introduced

    Payoff is the future cash flow. For a long option, profit = payoff - initial premium (aka, cost). For a short option position, profit = premium - payoff. Here is an interesting difference between the call and the put: the call's payoff/profit is theoretically uncapped, but the payoff of the put...
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