VOLATILITY SWAP
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Volatility swap is a forward contract with payments basing on realized volatility. The cash in such cases is settled based on the difference between the realized volatility and volatility strike.
Volatility swap is a forward contract with payments basing on realized volatility. The cash in such cases is settled based on the difference between the realized volatility and volatility strike.
Adverse selection is a situation when either seller or a buyer has a piece of information that the other party doesn’t have. The information in this case usually refers to the quality of the product in question.
Outside broker can refer to several things:
1. Broker who deals outside of the major exchange and deals with major securities.
2. A broker who deals with securities which aren’t traded in the exchange where he works.