Quantitative finance is mathematics applied to financial markets. Mathematical models are derived from several starting assumptions, to help predict behaviour and offer ways to manage risk.
If someone pays you 1 cent every day for the rest of eternity, is that worth infinity dollars?
If we receive $100 per month for the next 100 months, how much is that worth? Is it a deal to pay $10 000 for that priviledge?
These contracts help hedge the risk of longer-term price movements. If you believe that the price of gold will rise, being long a gold future could be extremely profitable.
Options are highly leveraged finance instruments that change the risk profile of a stock. Under the right circumstances, option strategies offer a high rate of return.
Options greeks provide a way to quantify the risk profile of the underlying options, which allows us to effectively arbitrage these similar instruments.
Hop on a straddle + ride the Butterfly = a long Strangle . Man, what are these people thinking?
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