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Derivatives




Spark Spread Swaption


An option that gives the holder the right, without the obligation, to enter into a spark spread swap by a specific future date. If the net cash flows from the underlying swap are expected to be positive, then the option’s holder would choose to exercise his/ her right by entering into the swap by which he/ she may receive the spark spread or the differential between natural gas and electricity.



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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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