futures and options
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| Currency options | Option contracts whose value is based on the value of an underlying currency, such as the Canadian dollar.
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| Equity-derivative securities | Securities that derive their value in whole or in part by having a claim on the underlying common stock.
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| Exercise (strike) price | The per-share price at which the common stock may be purchased from (in the case of a call) or sold to (in the case of a put) a writer.
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| Expiration date | The date on which an option expires.
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| Financial futures | Futures contracts on financial assets, such as equity indexes, fixed-income securities, and currencies
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| Future contract | Agreement providing for the future exchange of a particular asset between buyer and seller at a specified date for a specified amount.
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| Futures margin | The good faith (earnest money) deposit made by the buyer or seller to ensure the completion of a contract.
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| Hedge | A strategy using derivatives to offset or reduce the risk resulting from exposure to an underlying asset.
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| Hedge ratio | The ratio of options written to shares of stock held long in a riskless portfolio.
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| Index arbitrage | Exploitation of price differences between stock-index futures and the index of stocks underlying the futures contract.
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| Interest rate options | Option contracts on fixed-income securities such as Government of Canada bonds.
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| Intrinsic value | The estimated or true value of a security as determined by an investor after examining a firm's underlying variables.
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| Long hedge | A transaction where the asset is currently not held but futures are purchased to lock in current prices.
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| Long position | An agreement to purchase an asset at a specified future date at a specified price.
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| Long-term options | Options on individual stocks with maturities greater than one year.
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| Marked to the market | All profits and losses on a contract are credited and debited to each investor's account every trading day.
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| Offset | Liquidation of a futures position by an offsetting transaction—buyers sell their positions and sellers buy their positions prior to the settlement of the contract (delivery).
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| Option premium | The price paid by the option buyer to the seller (writer) of the option.
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| Options | Claims that give the holder the right, but not the obligation, to buy or sell a stated number of shares of stock within a specified period at a specified price.
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| Portfolio insurance | An asset management technique designed to provide a portfolio with a lower limit on value while permitting it to benefit from rising security prices.
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| Protective put | A strategy involving the purchase of a put option as a supplement to a long position in an underlying asset.
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| Put | An option that gives the holder the right, but not the obligation, to sell a specified number of shares of stock at a stated price within a specified period.
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| Put-call parity | The formal relationship between a European call and a put on the same item that must hold if no arbitrage is to occur.
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| Right | A corporate-created option to purchase a stated number of common shares at a specified price within a specified time (typically a few months).
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| Short hedge | A transaction involving the sale of futures (a short position) while holding the asset (a long position).
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| Short position | An agreement to sell an asset at a specified future date at a specified price.
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| Spread | The purchase and sale of an equivalent option varying in only one respect.
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| Stock-index options | Option contracts on a stock market index such as the S&P/TSE 60 Index.
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| Straddle | A combination of a put and a call on the same stock with the same exercise date and exercise price.
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| Swap | A cash settled forward agreement with a series of predetermined payments.
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| Time value | The difference between the intrinsic value of an option and its market price.
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| Warrants | An option created by a corporation to purchase a stated number of common shares at a specified price within a specified time (often several years).
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