interest rate option

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Interest Rate Option

An option contract giving the holder to buy (for a call) or sell (for a put) a security with a certain interest rate at a given strike price on or before the expiration date. An interest-rate option is useful to hedge the interest rate risk inherent to portfolios consisting mainly of bonds.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

interest rate option

An option contract on interest-bearing securities or on a futures contract on interest-bearing securities. These options are generally used as a means to manage the risk of a bond portfolio.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
For instance, Dutta & Babbel (2005) used the GB2 to extract risk-neutral densities from US Dollar interest rate options.
In line with the findings of Ritchken and Sankarasubramanian (1999) our results show, first, that interest rate options prices are quite sensitive to the elasticity parameter in the volatility structure.
(1.) Models to value interest rate options are not free from error, but their consistent application can yield valuations that tend to reduce opportunities for earnings manipulation.
Until now, the scale of hedging across all dealers in the over-the-counter interest rate options market has not been studied in the literature.
The Berlin-based startup ( Bitwala is moving into the digital banking industry over the next year, eventually offering investment brokerage and short-term, P2P bitcoin loans where customers choose their own payment schedules and interest rate options. There are even startups looking beyond the P2P model, such is the case with ( SALT Lending , based in Denver, Colorado.
The loan comes with lucrative interest rates and customers can choose between fixed and floating interest rate options. Other benefits of the loan include doorstep service in India until the disbursement and insurance cover for the loans at a desirable premium, the statement added.
The scandal was uncovered last year and it was originally thought 2,000 customers were unlawfully taken off tracker mortgages and put on to higher interest rate options.
She said she had left the farm "for UMass Amherst, went to Boston and London, then earned an MBA from Harvard Business School in 2008 and started a career in finance.'' Until February 2012, she was an interest rate options trader at State Street Bank.
The VXTYN Index, on which futures on VXTYN are based, is calculated by applying the CBOE Volatility Index (VIX Index) methodology to futures options data from CME Group's ten-year US Treasury note contract -- one of CME Group's most actively traded interest rate options products.
This year, NLX plans to expand its product offering with interest rate options contracts.
There are two interest rate options on a reverse mortgage: a fixed-rate option or an adjustable-rate mortgage (ARM) option.
Over the next 18 years he did pioneering work in derivatives and developed the Black-Derman-Toy interest rate options model.

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