7. The margin required for a short index option is generally
_____percent plus _________ or minus __________.
8. Limits and trading halts on price movements in futures are also
referred to as ____________ for controlling exacerbated market
moves and preventing panic.
9. When hedging a portfolio with futures, it is necessary to use
the ____________ ____________ of the portfolio in determining the
appropriate number of futures contracts to use.
10. When a futures spread is implemented between two different
futures in different markets, it is called a(n) _____________. When
executing such a spread, it is important to know whether there is
an inherent ____________associated with that spread.
11. From a risk perspective, what is the important difference
between a futures or futures options spread and a stock options
spread?
7. 20% plus the premium, or minus out of the money.
8. Circuit Breakers.: The limits and trading halts on price movement of futures is also known as circuit breakers.
9. Exposure.: While hedging a portfolio it is very important to understand the total exposure of the portfolio, so that appropriate futures contracts could be used to match the exposure at risk.
10. Inter-Exchange Spreads. Risk: Inter-exchange Spreads is the position where two different contracts are considered for investments into two different exchanges or markets. While executing such contract position, it is importnat to understand the inherent risk associated with the contracts. Because if the contracts move in opposite direction, it may be a problem for the investor.
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