Interest Rate Options

Dictionary Says

Definition of 'Interest Rate Options'

An investment tool whose payoff depends on the future level of interest rates. Interest rate options are both exchange traded and over-the-counter instruments.
Investopedia Says

Investopedia explains 'Interest Rate Options'

Interest rate options from exchanges in the United States are offered on Treasury bond futures, Treasury note futures and eurodollar futures. An investor taking a long position in interest rate call options believes that interest rates will rise, while an investor taking a position in interest rate put options believes that interest rates will fall.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Over-The-Counter Market

    A decentralized ...
  2. Futures

    A financial ...
  3. Option

    A financial ...
  4. Long (or Long Position)

    1. The buying of ...
  5. Short (or Short Position)

    1. The sale of a ...
  6. Cox-Ingersoll-Ross Model - CIR

    A mathematical ...
  7. Put

    An option ...
  8. Interest Rate

    The amount ...
  9. Interest Rate Floor

    An ...
  10. Auction Rate Bond - ARB

    A debt security ...

Articles Of Interest

  1. Interest Rates And Your Bond Investments

    By understanding the factors that influence interest rates, you can learn to anticipate their movement and profit from it.
  2. What Investors Should Know About Interest Rates

    Understanding interest rates helps you answer the fundamental question of where to put your money.
  3. Retirement Savings Tips For 35- To 44-Year-Olds

    Learn how the "sandwich generation" can save for retirement while taking care of their kids and parents.
  4. Derivatives 101

    Learn how to use this type of investment as an alternative way to participate in the market.
  5. Risk Tolerance Only Tells Half The Story

    Just because you're willing to accept a risk, doesn't mean you always should.
  6. Finding Your Investing Comfort Zone

    Choosing the right investments for you is the best way to feel comfortable with your portfolio.
  7. Investors: Rely On Your Gut

    Find out how your personality and natural instincts can direct your investment choices.
  8. Simplify Your Portfolio

    Faced with an overabundance of choices, many investors forget to stick to the basics.
  9. Hedging With ETFs: A Cost-Effective Alternative

    The benefits of ETFs for hedging are clear and investors of all sizes are taking notice.
  10. Minis Provide Low-Cost Entry To Futures Market

    These contracts provide access to commodities without a huge capital commitment.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center