The IFM team can tailor OTC products to meet a wide range of risk profiles and market views. Products range from simple swaps to customized and “exotic” options to structured products. Below is an overview of the four principal product types we trade.
Lookalike Options and Swaps. Also known as Plain Vanilla Options or Swaps, these are IFM’s most basic OTC product. Lookalike options offer similar optionality features as their exchange-traded equivalents regarding strike, expiration date, and premium.
Customizable Options offer similar benefits as Lookalikes, with the addition of customizable expiration date, strike, or futures reference contracts. This flexibility can enable a hedge that more closely aligns with the user’s risk profile and strategy, however it does limit the customized option’s optionality from being fungible with the exchange.
Asian, Digital and Barrier options. Asian options determine payout by figuring the average of the underlying price over a pre-set period of time. Digital options (a.k.a Binary or All-Or-Nothing options) pay the owner a fixed amount if the market settles at a predetermined level. Conversely, if it does not settle at that level, the owner receives nothing. Barrier options are either activated (knocked-in) or deactivated (knocked-out) when the market reaches a pre-determined “top” or “bottom” range.
Structured Products enable a customer to “accumulate” a short swap above the current market or a long swap below the current market so long as the market stays within a specified range. This range is agreed upon by the broker and customer, and its limitations are typically marked by a predetermined accumulation level on one end and a barrier level on the other end.
More detailed information on each of these product types can be found on their individual subpages, available via the navigation at left.
Trading over-the-counter and exchange-traded derivatives is not suitable for all investors and involves substantial risk. INTL FCStone Markets, LLC (“IFM”), a subsidiary of INTL FCStone Inc., is a member of the National Futures Association and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. IFM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of IFM. Any recipient of this material who wishes to express an interest in trading with IFM must first prequalify as an ECP, independently determine that derivatives are suitable for them and be accepted as a customer of IFM. Trading over-the-counter (“OTC”) products or “swaps” involves substantial risk of loss. This is not an offer to buy or sell any derivative. This material does not constitute investment research and does not take into account the particular investment objectives, financial situations, or needs of individual clients or recipients of this material. You are directed to seek independent investment and tax advice in connection with derivatives trading.
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