EC249 Lecture Notes - Lecture 18: Russian Ruble, Open Interest, Futures Exchange
Document Summary
Open interest refers to: the spread between the spot and the settle, the number of markets futures in a particular currency are traded, the number of contracts outstanding for a particular delivery month. Outstanding futures and options that are trading on an official exchange at any one time. Is a good proxy for demand for a contract. Some refer to open interest as the depth of the market. The breadth of the market would be how many different contracts (expiry month, currency) are outstanding. A european option: can only be exercised at expiration date. Currency options- preliminaries: an option gives the holder the right, but not the obligation, to buy(call) or sell(put) a given quantity of an asset in the future, at prices agreed upon today. An american option: can be exercised at any time up to and including the expiration date. Priced higher- can do everything that a european option can and more.
