Equity Notional Amount - Equity Derivatives Provision: Difference between revisions

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*{{eqderivprov|11}}  is {{eqderivprov|Adjustments and Modifications}}.
*{{eqderivprov|11}}  is {{eqderivprov|Adjustments and Modifications}}.
====See Also====
====See Also====
 
{{how Equity Notional Reset works}}
{{eqderivanatomy}}
{{eqderivanatomy}}

Revision as of 18:11, 14 December 2015

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Commentary

It is different to the Initial Price in that Initial Price is expressed as a price per Share, whereas the Equity Notional Amount tends to be Initial Price * Number of Shares.

See Also

How Equity Notional Reset works

Strap yourselves in, kids!

A beginner’s guide to the complex and tortuous world of what happens when your Equity Notional Amount is subject to Equity Notional Reset.

The short version’s really quite easy: You just restrike the trade at the market value, and pay out the difference in the value of the underlier over the reset period. As follows:

The long version’s a bit of a ball-breaker:

It’s like converting a posted variation margin into an absolute obligation by restriking the Transaction. Template:Eqderivanatomy