Backwardation

A market condition in the equity and commodity futures market, in which the spot is higher than the forward rate.

Barrier

An agreed rate at which an event will occur, for example, an option is knocked in or out, or a payout is activated.

Barrier options overview

A barrier option is a European style vanilla option that is activated (knocked in) or terminated (knocked out) under conditions specified in the option's contract.

Basis point

A basis point is a change in the yield of a security. One basis point is 1/100 of a percentage point (or 0.01%).

Basket Options

A basket option is an option which provides its holder with the right, but not the obligation, to exchange a specified quantity of base currency for specific quantities of two or more assets (either foreign currencies or commodities or equities) on a specific date.

Bear

A bear is a person who expects market prices to fall.

Bermudan style option

A Bermudan style option is a mixture of European and American style options.

Bermudan swaption

A Bermudan swaption is a swaption where the owner has the right to enter into the underlying swap either on the swaption's expiry date or on a number of other predefined exercise dates after that expiry date.

Best of barrier

The best of barrier instrument is in effect a call (or put) barrier instrument with a basket of underlying assets where...

Best of Barrier2

Best of option

What is a best of/worst of instrument? The best of/worst of option is composed of a basket of call (or put) options all with the same expiration dates but each for a different underlying asset (i.e., currency pair).

Bid

The bid price is the price the market maker is willing to pay to buy an asset.

bid-ask spread

The bid/ask spread is the difference between the bid and the ask.

Bid-offer spread

See bid/ask spread.

Binary option overview - IR

See Digital.

Binary options overview

A binary option (also known as an all or nothing option) is an option where a fixed payout is made under conditions defined in the option's contract.

Black-Scholes model

The Black-Scholes model (or Black-Scholes) is a mathematical formula...

BMA index

The Bond Market Association is...

BMA swap

A BMA swap (or municipal interest rate swap) is an interest rate swap...

Bond

A bond is a certificate of a debt that is usually issued by a government or large corporation.

Bonus forward

A bonus forward is an option with a strike and a knock out trigger...

Box

A box option contains 2 triggers (T1 and T2) that define a range.

Breakeven price

The breakeven value is the level the spot has to reach in order for the user to make back the cost of the premium.

BRL futures option

See Futures option for BRL.

Brownian motion

Brownian motion is the pattern of random motion described by Robert Brown.

Bull

A bull is a person who expects market prices to rise.

Bullet

A bullet is a vanilla option on an underlying contract that is generally composed of more than one monthly future...

Butterfly

A butterfly is a vanilla strategy. It is an out-of-the-money strangle with an ATM straddle.

Butterfly spread

This option strategy is built out of four options of the same option type (all calls or all puts) on the same underlying...