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Clear filtersThe Greeks
Sensitivities of an option's price to each of its inputs. They are the vocabulary for describing what a position is actually exposed to.
Vertical Spreads
Buying one option and selling another of the same type and expiry at a different strike. Both the cost and the maximum outcome are capped.
Calendar Spreads
Selling a near-dated option and buying a longer-dated one at the same strike. The position is a bet on time and on volatility rather than on direction.
Long-Dated Options
Options with expiries measured in years. Time decay is slower, the premium is larger, and the exposure to volatility and rates is correspondingly greater.
Futures Margin and Daily Settlement
Futures margin is a performance bond, not a loan. Positions settle in cash every day, which means a losing position consumes cash before it is closed.
Roll Yield in Practice
A fund holding futures must roll them forward. The shape of the futures curve determines whether that roll costs money or earns it, and over years the effect dominates.
VIX and Volatility Products
An index measuring expected volatility over the next thirty days. It cannot be held directly, and the products referencing it behave differently from the index.
Leveraged and Inverse Funds
Funds targeting a multiple of an index's daily return. The daily reset means their long-run behaviour differs from the multiple in ways that are mathematical rather than incidental.