Filter by Categories
Accounting
Banking

Derivatives




Effective Gearing


A measure of gearing which is calculated by multiplying the gearing of a call option (put option) by the call option’s (put option’s) delta. It measures the percentage change in the option price relative to that in its underlying asset. Symbolically, effective gearing is given by:

Effective Gearing

Where: Ω is effective gearing, V is the option price, S is the underlying price, is Δ delta, and S/V is simple gearing.

It is also referred to as elasticity or omega.



ABC
Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
Watch on Youtube
Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments


    Leave Your Comment

    Your email address will not be published.*