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Derivatives




High-Low Option


A cash-settled call option that combines two lookback options and where it pays the difference between the high and low prices/ rates of an underlying (such as a stock or stock index) reached during a specific period multiplied by the contract size. Holders of a high-low option usually take the view that the market volatility will be higher than the implied volatilities of component lookback options.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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