An option that pays an amount of interest on an agreed-upon amount of notional principal whenever the market index is above the cap contract's index rate. An option to buy a cap option contract. This is a form of compound option giving the holder the right, but not the obligation, to enter into a cap contract at a predetermined rate on a predetermined date. The difference between the cash price and the fair futures price. This reflects the net carrying cost.
Actual basis is the sum of carry basis and value basis.
One of the world's largest organized futures markets. One of the world's largest organized futures markets. An option made up of a cap and floor option. A transaction created by purchasing either a put and a call or by writing a put and a call. The federal agency that regulates the futures market in the United States.