Derivatives · glossary
A trade in which the buyer pays a premium once and may then receive payments, owing nothing more. A cap pays when a rate is above a level, and a floor when it is below one. Atlas's cap is the only option on this file. Definition: Option · Chapter 3
Explained in Chapter 3, The Cap, and the Family, of Derivatives.
An option is one-way. The buyer pays a fee once, called the premium, and after that it only receives. On an interest rate, a cap pays the buyer when the rate is above an agreed level, and a floor pays when it is below one. Atlas will buy a cap.Read Chapter 1, What a Derivative Is →
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a Transaction under which one party pays a Premium and may in return receive payments if an agreed rate is above an agreed level (a cap) or below one (a floor), and owes nothing beyond the Premium;Read the definition in the document →
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