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Strategies & Market Trends : Wings-FPT

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To: OX who wrote (74)9/15/2000 7:29:15 PM
From: Louis V. Lambrecht  Read Replies (2) of 124
 
OX - one big advantage I see in SSF's is that the price is fixed.
You would trade a SSF xyz Mar 2001 @ $nnn.
This could be useful in hedging as you know exactly at the time of the trade at which price that xyz share will be settled in Mar 2001.
No strike price here as in options, no risk to be "called" or "put" before expiration, no OTM worthless expiration.

The trade remains valid until maturity, at which time it will be settled by delivery.
Or offset before maturity by balance with today's trade price.

It opens some extra combinations with options and many sleepless nights. *grin*
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