Interest Rate Index Options Flashcards
1
Q
What are Int. Rate index options used for?
A
To speculate on market interest rate movements
2
Q
What is the availability of Int. Rate index options?
A
Availability is based on the yeild of the most recently auctioned:
- 13 week T-bill (IRX)
- 5 Year treasury note (FVX)
- 10 year Treasury note (TNX)
- 30 year treasury bond (TYX)
3
Q
What is the exercise style for interest rate index options?
A
European style
4
Q
How do call premiums and put premiums on Int. Rate Index options react to market interest rates?
A
Call premiums move directly with int. rates
Put premiums move inversely with int. rates
