A convertible bond is a type of security that can be converted into a predetermined number of shares of the issuer’s common stock at certain times during its life. Convertible bonds typically offer lower interest rates compared to regular bonds because they come with the potential for higher returns if …

A catastrophe bond, commonly referred to as a cat bond, is a type of insurance-linked security that allows insurers and reinsurers to transfer the risk associated with catastrophic events, such as natural disasters, to capital market investors. These bonds are typically issued by insurance companies or special purpose vehicles (SPVs) …

Zero DTE (0DTE) options, also known as “same-day expiration” options, are financial derivatives with expiration dates on the same day they are traded. These options offer traders the opportunity to profit from short-term price movements in the underlying asset. Due to their extremely short time frame, zero DTE options are …

Credit value adjustment (CVA) is a financial concept used to account for the potential loss in value of a portfolio due to counterparty credit risk. Essentially, CVA reflects the difference between the risk-free portfolio value and the true portfolio value, considering the possibility of counterparty default. It’s a critical component …

In 1993, the Chicago Board Options Exchange (CBOE) launched the Volatility Index (VIX), which became a crucial gauge for expected short-term market volatility. It serves as the foundation for trading volatility futures and portfolio hedging. Initially, the VIX was model-dependent and applied to the S&P100. Then, the CBOE developed a …

The VIX, developed by Robert Whaley in 1993, represents implied volatility with a fixed 30-day maturity and is quoted annually. Originally designed as a model-based IV index on the S&P 100, its purpose is to serve as a foundation for trading volatility derivatives. These derivatives are valuable for hedging portfolios …

Volatility refers to the degree of variation of a trading price series over time. It is a statistical measure of the dispersion of returns for a given security or market index. High volatility indicates a greater potential for significant price swings, both upward and downward, while low volatility suggests a …

Employee stock options (ESOs) are a compensation tool offered by companies to their employees, granting them the right to purchase shares of the company’s stock at a predetermined price. ESOs serve as incentives for employees, aligning their interests with the company’s success and long-term growth. Typically, these options have a …

A startup is a fledgling company or entrepreneurial venture in its early stages of development, typically characterized by innovation, a focus on disruptive technology or business models, and the pursuit of rapid growth. Startups often face high levels of uncertainty and risk, seeking to fill a gap in the market …

Dividends are a fundamental component of many investment strategies and a crucial aspect of equity ownership. They represent a portion of a company’s profits that is distributed to its shareholders, typically on a regular basis, such as quarterly or annually. Dividends are an input in the pricing model for equity …