Glossary

FINANCIAL TERMS SPECIFIC TO PRODUCT CONTROL
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American Option

An option which can be exerised by the holder at any point up until the contracted expiry date.

At The Money

Abbreviated to ATM, a term used to describe an option where the current price of the underlying is equal to the strike price of the option.

Call Option

A derivative instrument.  The right, but not the obligation, to purchase a set quantity of an underlying asset for a specific price (the strike) at a future date.  On the purchase of the option the buyer will pay a premium [Note also the difference between American Options and European Options].

European Option

An option which can only be exerised on the contracted expiry date.

FDS/ Financial Decision Support

A team, usually sitting within Finance, which provides and develops MI reporting to enable management assess performance and determine strategic direction.

In the Money

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Abbreviated to ITM, a term used to describe an option which has intrinsic value. For a call option this would mean the current price of the underlying is above the strike price. For a put option the current price of the underlying would be below the strike price.

KPI / Key Performance Indicators

The benchmarks against which the management of an organisation or busines line assess its performace.  Examples include budget, cost and expense ratios and return on capital.

MI / Managment Information

A generic name given to reports provided to the management of an organisation.  These reports cover a range of KPI’s and facilitate performance analysis and strategic decision making.

Out The Money

Abbreviated to OTM, a term used to describe an option which has no intrinsic value. For a call option this would mean the current price of the underlying is below the strike price. For a put option the current price of the underlying would be above the strike price.

Put Option

A derivative instrument.  The right, but not the obligation, to sell a set quantity of an underlying asset for a specific price (the strike) at a future date.  On the purchase of the option the buyer will pay a premium. [Note also the difference between American Options and European Options].

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