Keeping your options open

Credit options

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Options usually represent a major part of any derivative market. They are, in a sense, the perfect hedge, providing protection when the market moves against a portfolio and conveniently becoming irrelevant when market moves are favourable. In many ways options are like insurance to an investor: they can buy an asset but also buy the opportunity to sell it later at a certain price if the investment goes wrong.

In the derivative markets of equity and interest rate swaps, options represent a siz