STIR Futures & Options


DEFINITION of 'STIR Futures & Options'

An acronym standing for "short-term interest rate" options or futures contract.

BREAKING DOWN 'STIR Futures & Options'

Many companies and financial institutions use STIR contracts to hedge against borrowing or lending exposure.

  1. Hedge

    Making an investment to reduce the risk of adverse price movements ...
  2. Option

    A financial derivative that represents a contract sold by one ...
  3. Clearing House

    An agency or separate corporation of a futures exchange responsible ...
  4. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  5. Swap

    A derivative contract through which two parties exchange financial ...
  6. Convergence

    The movement of the price of a futures contract towards the spot ...
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  1. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
  2. How do hedge funds use equity options?

    With the growth in the size and number of hedge funds over the past decade, the interest in how these funds go about generating ... Read Full Answer >>
  3. Can mutual funds invest in options and futures?

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  4. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  5. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
  6. Why do companies enter into futures contracts?

    Different types of companies may enter into futures contracts for different purposes. The most common reason is to hedge ... Read Full Answer >>

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