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Final Price - Equity Derivatives Provision: Difference between revisions
Final Price - Equity Derivatives Provision (view source)
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Note that {{eqderivprov|Final Price}} isn't necessary the ''final'' {{eqderivprov|Final Price}}: you determine a fresh {{eqderivprov|Final Price}} on every {{eqderivprov|Valuation Date}}, as of the {{eqderivprov|Valuation Time}}, and they feed into the {{eqderivprov|Cash Settlement}} (or {{eqderivprov|Equity Notional Reset}}) process, whereby one party pays out the movement price of the underlier over the period since the last {{eqderivprov|Valuation Date}}. | Note that {{eqderivprov|Final Price}} isn't necessary the ''final'' {{eqderivprov|Final Price}}: you determine a fresh {{eqderivprov|Final Price}} on every {{eqderivprov|Valuation Date}}, as of the {{eqderivprov|Valuation Time}}, and they feed into the {{eqderivprov|Cash Settlement}} (or {{eqderivprov|Equity Notional Reset}}) process, whereby one party pays out the movement price of the underlier over the period since the last {{eqderivprov|Valuation Date}}. | ||
Thus, | Thus, {{eqderivprov|Final Price}} for today’s {{eqderivprov|Valuation Date}} becomes the {{eqderivprov|Initial Price}} for the ''next'' {{eqderivprov|Valuation Date}}, and so on and so on — yesterday’s rooster is today’s feather duster so to say. | ||
Only on the ''final'' {{eqderivprov|Final Price}} does the {{eqderivprov|Transaction}} terminate. | Only on the ''final'' {{eqderivprov|Final Price}} does the {{eqderivprov|Transaction}} terminate and that contingency — you know, calling it quits and wrapping the whole thing up — isn’t addressed in any particular way in the definitions booklet, the presumption being that you will just follow the same procedure as you would for any other Valuation Date on the last one. This might give your US Tax guy the heebie-jeebies, be warned, as {{sex|he}} will want [[VWAP]], or some kind of [[Hypothetical broker-dealer|hypothetical broker dealer]] referenced in the very last one. Dash cold water in his face if so, and tell him to ''get it together, man''. | ||
{{Equity swaps versus forwards}} | {{Equity swaps versus forwards}} | ||