The price at which you buy or sell is called the strike price. Underlying asset. It is the reference asset on which the right is granted, it can be a stock, a basket of shares, a stock index, currency, interest rate. Future date at which the Forex VPS transaction occurs is called exercise date. The price paid for the warrant. This price is composed of intrinsic value.
Difference between the price of the underlying Forex VPS and the exercise price. Time value. That part of the premium that values the right to buy or sell the underlying inherent in the warrant. It is determined by factors such as volatility and time to maturity. Ratio: is the number of underlying assets represented by each warrant can therefore be a fraction or multiple of 1.
Features
For investors: the warrants are products designed for them. There are various Forex VPS issuers and a wide variety of underlying (domestic or foreign shares, indices, baskets, exchange rates, raw materials, etc). The liquidity in the warrants market is guaranteed, since there are market makers who provide such liquidity. Leverage: magnify the movement of the underlying asset.
Positioned to allow up and down movements, profit and/or unlimited losses. They have a limited life (1 to 2 years). These are warrants entitle you to receive a fixed amount on the due date, provided that the underlying is quoted within set limits. If the underlying asset exceeds the limits set (top and bottom) at any time during the life of the warrants (inLine) these expire worthless (since the settlement would be zero).
The inLine warrants are traded on the Stock Exchange with guaranteed liquidity throughout the trading session and are suitable for markets evolving within a price range more or less broad (eg , between 5,000 and 9,500 points in the Dow 35).
The manifestation of settlement risk may result in the occurrence of adverse events associated with the action or inaction of one, several or most of the credit institutions and/or provision of the settlement system as shown by Forex VPS.
Settlement risk in the foreign exchange market is due primarily to the lack of coincidence in time payments. As a general rule, Forex VPS payments range from one to two business days. The largest payment systems in different countries are in different time zones, and therefore can not carry out the operation at the same time for different countries.
Settlement risk in the foreign exchange market has two components : liquidity risk and credit risk. The first component is related to the late implementation of the commitments (which can lead to liquidity problems to the dealer), and the second component – defaults on the transaction.