August 08, 2006

Fed Fund Binary Options

J R Varma has a commentary on CBOT’s new Fed Fund Binary Options. There’s been an FT article yesterday on these.

The interesting bit is, the underlying risk can sometimes be discontinous if you believe Fed Fund target as a driver of risk appetite in other markets. This makes the discontinous and unhedgeable greeks of binary options moot.

Posted by aviks at 07:21 PM | Comments (0)