Islamic Finance

Riba Mubashir

February 3, 2023
Finance

Tax-Equivalent Yield

February 3, 2023

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A hedging technique which aims to make the price of a set (or portfolio) of derivatives immune to small movements in the prices of the derivatives’ underlying assets by fine-tuning the overall position’s delta.

For example, in options trading, long and short positions may be taken to offset each other so as overall deltas can be hedged. A long position in a call option can be hedged by selling or shorting the underlying security.

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