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Derivatives




Monetizing an Option


An embedded option that is sold by a firm to derivatives dealers in order to realize cash out of it instead of letting its contract expire worthless. This option is often an implicit component or feature of financial contracts or agreements, which has value, per se, though it cannot be realized without the option being monetized, i.e., converted into cash by selling it into dealers seeking mirror or offsetting transactions.



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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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