Options form an important part of the portfolio of banks, financial institutions and investors. Traded on regulated Exchanges as well as the Over-the-Counter (OTC) market, they are popular derivative products which serve multiple purposes including: hedging, speculation or arbitraging.

Plain vanilla options are primarily classified as Call and Put options indicating the right to Buy/Sell a certain asset by the buyer of the option. Further, options are also classified based on the time to exercise as European and American.

· European options can be exercised only at maturity / option expiry

· American options can be exercised at anytime from…

In this article we will understand the application of parallel computing for Risk Analytics. We introduced ourselves to the concept of parallel processing in my previous article that can be found here.

Risk Management is an area of finance that has been evolving over the years. Risk analytics is no stranger to innovation. There are periodic enhancements that market participants come up for measuring risk more efficiently. Sophisticated mathematical and statistical techniques are applied for developing models for risk analytics. With the rise of big-data, the use of technology in finance has risen manifold. …

Parallel Computing for Finance

Technology is making inroads into every sector of the economy; the financial industry too is no stranger to technology. Financial industry has always been at the forefront when it comes to adopting innovation. Organizations globally are looking at technology as an enabler to reach their strategic goals. Thus, making the most efficient use of the available system infrastructure is vital. Parallel computing is one such idea which enables us to leverage the power of computing for our applications. This concept has been around for some time now, however, off-late with rising computing demand from big data, increasing complexity of financial…

Interest Rates are a key component in every economy. They are linked to almost every economic activity happening in the market be it lending/borrowing of funds, pricing of financial products, trading, asset-liability management for banks etc. Just as interest rates are important in the cash market, they play an equal or albeit more significant in the derivatives market.

Derivatives as a product type are widely used for various applications in finance be it trading, risk management, hedging etc. …

Options as a product type form an important segment of the derivatives asset class. Options are used extensively by market participants including banks, financial institutions, insurance firms etc. be it for Trading or for Risk Management purposes.

A brief on basics of Options

For the benefit of readers, I will explain the basics of Options in a nutshell. Options are a type of a derivative which give the right but not the obligation to the holder/buyer of the Option to buy/sell a certain item at a pre-specified price and at a certain time in the future. The holder gets this…

Credit Risk Analytics

Idea of credit risk is not new to us. Many times, during our everyday lives we are exposed to this risk. Imagine back in our college days when we lent some of our pocket money to a friend because he/she had to buy something and was falling short of funds. We used to be surely concerned if we were indeed going to receive our money back! This was the potential loss from credit risk that was bothering us! Those were good old days 😊.

The financial industry too is no stranger to the perils of credit risk. Banking and Financial…

This article is the third and the final article amongst a series of articles that I have published to discuss the new interest rate benchmarks regime that is set to debut in the year 2021. The previous two articles of this series can be found at the following:

Article — Part I

Article — Part II

In this post, we begin by looking at a few floating rate benchmarks that are expected to be at the center of the new interest rate regime. Then we will explore key characteristics of overnight rates. …

This article is the second amongst a series of articles that I plan to publish over the next few weeks to discuss the new interest rate benchmarks regime that is set to debut in the year 2021. The first article of this series can be accessed at: Part I of this article

In this post, we begin with discussing the desirable properties of a good benchmark rate, we will then compare the properties of existing IBOR rates vis-à-vis the aforesaid desirable properties. …

Interest Rates regime benchmarks

This article is the first amongst a series of articles that I plan to write over the next few weeks to discuss the new interest rate benchmarks regime that is set to debut in the year 2021.

We often hear the term benchmark in our everyday lives. Benchmark is perceived as a standard or a reference marker in its respective field of application. For instance, a few commonly used benchmarks that come to my mind are:

a. Consumer Price Index (CPI): This is the reference for the current level of inflation in the economy.

b. Brent Crude benchmark: Based on…

Risk Analytics

The domain of risk analytics is gaining significant importance in the recent times. Almost every financial daily and periodicals on capital markets have significant coverage of risk management. Over the years, the financial industry has witnessed innovative products being introduced to the market. In the past, market participants, investors and banks alike, have eagerly traded such novel products, earning handsome payoffs and on certain occasions getting their hands burnt. New financial product entails new types of risks. Over the last decade, especially post the 2008 meltdown, industry participants have been ramping up their risk infrastructure in order to better manage…

Abhyankar Ameya

Founder: FinQuest Institute; www.finquestinstitute.com

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store