Why are contingent assets and liabilities like options

Reference no: EM13295518

A futures contract is "an agreement involving the future exchange of an asset for cash at a price that is determined daily" (Saunders & Cornett, 2008, p. 701). A pro for futures contracts is they are traded on, and guaranteed by an exchange, so the risk of default is minimal, and a con is the contracts are standardized.

Now let's think about this everyone:
Why are contingent assets and liabilities like options? What is meant by the delta of an option? What is meant by the termnotional value?

Reference no: EM13295518

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