Final Price - Equity Derivatives Provision: Difference between revisions

Final Price - Equity Derivatives Provision (view source)

291 bytes added , 24 September 2019

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 {{eqderivanat|5.9}}
-Note that Final Price isn't necessary the ''final'' price - you determine them on every Valuation Date, as of the Valuation Time, and they feed into the Cash Settlement (or Equity Notional Reset) process, whereby you pay out any movements in the stock between valuation periods. Thus, Today’s Final Price becomes the Initial Price for the purposes of the next Valuation Date, and so on and so on. Only on the ''final'' {{eqderivprov|Final Price}} does the {{eqderivprov|Transaction}} terminate.
+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, today’s {{eqderivprov|Final Price}} becomes the {{eqderivprov|Initial Price}} for the purposes of the next {{eqderivprov|Valuation Date}}, and so on and so on — yesterday’s rooster is today’s feather duster.
+Only on the ''final'' {{eqderivprov|Final Price}} does the {{eqderivprov|Transaction}} terminate.
 {{Equity swaps versus forwards‎}}
 {{Seealso}}
 *[[Volume Weighted Average Price]] ([[VWAP]])
 *{{eqderivprov|Relevant Price}}