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Derivatives




Paper Loss


It refers to unrealized capital losses in an open position in options or futures (or generally in an investment portfolio). Paper losses are quantified by comparing the current market price to the original cost of the derivative instrument or investment. They are not realized until a futures position is liquidated, an option to sell is exercised, or securities (held in a portfolio) are sold.

Paper gains are also known as paper profits.



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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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