Initial Price - Equity Derivatives Provision: Difference between revisions
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Used in {{eqderivprov|Rate of Return}}, which in turn is used in {{eqderivprov|Equity Amount}}, and also very relevant to the {{eqderivprov|Equity Notional Reset}} process. The {{eqderivprov|Initial Price}} is different to the {{eqderivprov|Equity Notional Amount}} in that it is expressed as a price ''per {{eqderivprov|Share}}'', whereas the {{eqderivprov|Equity Notional Amount}} tends to be {{eqderivprov|Initial Price}} * {{eqderivprov|Number of Shares}}. | Used in {{eqderivprov|Rate of Return}}, which in turn is used in {{eqderivprov|Equity Amount}}, and also very relevant to the {{eqderivprov|Equity Notional Reset}} process. The {{eqderivprov|Initial Price}} is different to the {{eqderivprov|Equity Notional Amount}} in that it is expressed as a price ''per {{eqderivprov|Share}}'', whereas the {{eqderivprov|Equity Notional Amount}} tends to be {{eqderivprov|Initial Price}} * {{eqderivprov|Number of Shares}}. | ||
Note there is an ''initial'' {{eqderivprov|Initial Price}} — the strike price in the {{isdaprov|Confirmation}} — but it is reset on every {{eqderivprov|Valuation Date}} to the {{eqderivprov|Final Price}} on that date — so the {{eqderivprov|Initial Price}} fluctuates over time. | Note there is an ''initial'' {{eqderivprov|Initial Price}} — the strike price in the {{isdaprov|Confirmation}} — but it is reset on every {{eqderivprov|Valuation Date}} to the {{eqderivprov|Final Price}} on that date — so the ''prevailing'' {{eqderivprov|Initial Price}} fluctuates over time. | ||
The way the {{eqderivprov|Initial Price}} definition is drafted, you don’t need to say “... subject to adjustment on each {{eqderivprov|Valuation Date}}” in the {{isdaprov|Confirmation}}, although for many of you this is sure to prove an irresistible temptation. | The way the {{eqderivprov|Initial Price}} definition is drafted, you don’t need to say “... subject to adjustment on each {{eqderivprov|Valuation Date}}” in the {{isdaprov|Confirmation}}, although for many of you this is sure to prove an irresistible temptation. | ||
Revision as of 10:29, 19 September 2019
Template:Eqderivsnap Used in Rate of Return, which in turn is used in Equity Amount, and also very relevant to the Equity Notional Reset process. The Initial Price is different to the Equity Notional Amount in that it is expressed as a price per Share, whereas the Equity Notional Amount tends to be Initial Price * Number of Shares.
Note there is an initial Initial Price — the strike price in the Confirmation — but it is reset on every Valuation Date to the Final Price on that date — so the prevailing Initial Price fluctuates over time.
The way the Initial Price definition is drafted, you don’t need to say “... subject to adjustment on each Valuation Date” in the Confirmation, although for many of you this is sure to prove an irresistible temptation.
See also
- Equity Notional Amount
- Equity Notional Reset, the process by which your trade is re-struck on each Valuation Date.