Downside and upside analysis
Compare purchased puts, calls and combinations with the existing portfolio, including premium cost, participation and residual exposure.
DERIVATIVES / OPTIONS & VOLATILITYPrice exposure.
Price exposure.
Volatility insight.
Calls, puts and combinations for examining price and volatility exposures, with explicit premiums, exercise terms and settlement.
HOW THE INSTRUMENT WORKS
Options & Volatility
An option gives its holder a contractual right linked to an underlying asset or futures contract. Calls, puts and multi-leg combinations have different payoff shapes; the premium, exercise style and settlement terms define the rights and obligations of each party. Purchased options can expire without value; written options create contractual obligations.
INSTITUTIONAL FOCUS
Funds, professional trading teams, investment allocators and eligible institutions with a defined exposure or hedging objective.
APPLICATIONS
Start with a specific exposure.
Volatility and relative value
Examine implied volatility, skew, term structure and the sensitivities of a position rather than relying on a directional price view alone.
Portfolio overlays
Assess collars, spreads and other documented combinations against an agreed mandate, liquidity requirement and loss scenario.
CONTRACT & BRIEFING INPUTSRead the terms.
Read the terms.
Define the operating scope.
- Underlying and position
- Asset, index or futures contract; call or put; buyer or seller; notional and leg ratios.
- Strike and expiry
- Strike price, expiration date and time, exercise style and automatic-exercise provisions.
- Premium and valuation
- Premium currency and payment convention, valuation inputs and relevant price and volatility sensitivities.
- Exercise and settlement
- Cash settlement or delivery, settlement reference, exercise instructions and assignment obligations.
- Collateral and lifecycle
- Seller collateral, margin treatment, early close, corporate or market events and reporting requirements.
PRODUCT LIFECYCLE
From exposure to an accountable record.
- 01
Define
Identify the exposure and distinguish the institution’s market view from its hedging objective.
- 02
Compare
Review individual legs, premium, payoff scenarios and changes in price, time and volatility.
- 03
Confirm
Document exercise, settlement, collateral and the responsibilities of each contracting party.
- 04
Review
Track sensitivities, expiry and assignment events; reconcile premiums and settlement cash flows.
RELATED INSTRUMENTS
Compare the product choices.
Futures
Listed contracts for defined market exposure, position hedging and the management of basis, expiry and collateral.
Explore the productStructured Solutions
Contract-defined payoff structures linking cash instruments and derivatives to a specified exposure, tenor and settlement process.
Explore the productCONNECT WITH SOLIRION
Start a product discussion Discuss your options & volatility requirements.
Include the underlying, approximate notional, time horizon, institution and relevant jurisdictions. Contract and service details can then be assessed for your specific requirements.