Dispersion Trade

This Issue in United States

Dispersion Trade

Concept of Dispersion Trade in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): A structure in which one party sells an option on an index and simultaneously buys individual options on each of the index constituents. The buyer of this structure will be in the money if the index components are negatively correlated.

Resources

See Also

• Derivatives Contract