Common Contracts
1 similar Introduction to Derivative Securities contracts
De nition 1.1 A forward contract is an agreement to buy (or sell) an asset on a speci ed future date for a speci ed price.Introduction to Derivative Securities • November 5th, 1998
A pro t is guaranteed (without risk) for the seller if (x1; x2) lies in the interior of the shaded region in Figure 1. On the boundary of the region, there is a positive probability of pro t and no probability of loss at all points other than the intersection of the two lines. At that point the seller is guaranteed to have exactly that money required to meet the claim against her at time T .
