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Shock Absorber


A short-term or temporary curb which is posed on the trading of particular stock index futures contracts in order to restrain trading below a certain price level. The curb sets off in case stock index futures prices have substantially decreased in intraday trading. The shock absorber is essentially designed to allow for an adjustment break so as new market information is assimilated. Unlike circuit breakers, shock absorbers are market-specific.



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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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