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Derivatives




Step Payment Option


A standard option where part or all of the premium is deferred, depending on the spot price reaching preset triggers during the life of the option. If the spot price reaches or breaks trough a particular trigger level before expiration, the buyer of the option (the long) will have to pay the specified premium amount as corresponding to that trigger level.

This option is also known as a step-premium 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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