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Derivatives




Profit-Share Option


An option which allows the holder to pay a reduced premium amount in return for forgoing a portion of any potential payoff. That means, with a profit-share option, the holder forgoes a part of the amount by which the option is in-the-money at expiration date.

This option is also known as a participating option.



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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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