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   Elasticity
   















 

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Elasticity

(1) A measure of the response of one value to a relative change in another. For example, if volume is not affected materially by a given percentage change in price, volume is said to be inelastic to price. If volume increases greatly when prices are cut slightly and drops sharply with a small price increase, volume is highly elastic to price. (2) Used colloquially as an equivalent of delta or neutral hedge ratio. Note that delta is an absolute change measured in currency units, so this usage is not strictly consistent with the origins of the term in economics. (3) Delta times the underlying price divided by the option or warrant price. Equivalent to Gearing, Leverage Factor.

Glossary * E