Commodities Basics
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A commodity is generally considered a standardized, homogeneous good that can be processed and resold. However, in reality commodities often vary widely in quality and are difficult to define and standardize. Creating measurement and quality standards is challenging but necessary to facilitate trading. Commodity exchanges have played a key role in addressing these challenges to establish liquid commodity markets.
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Derivatives Fundamentals
Describes what derivatives are and explains the differences between over-the-counter and exchange-traded
derivatives, Identify types of underlying assets on which derivatives are based, describes the participants in and use of derivative trading, describes what options are and how they are traded, and evaluate call and put option strategies for
individual and institutional investors and corporations.
5. Describe what forwards are, distinguish futures contracts from forward agreements, and evaluate
futures strategies for investors and corporations, define and describe rights and warrants, explaining why they are issued,
Derivativemarketinnepal 130710115026-phpapp02
Group B consists of 7 members: Ritu Joshi, Sarita Maharjan, Ankur Shrestha, Krishna Chalise, Dipika Shrestha, Pawan Kawan, and Sona Shrestha. The document provides an overview of derivatives markets, including definitions of different types of derivatives (e.g. futures, options, swaps, forwards) and parties involved (e.g. clients/investors, brokers, clearing houses). It also discusses the trading process, regulations, and current state of derivative markets in Nepal.
commodity trading and derivatives
Commodities can be anything for which there is demand and can be traded in commodities markets. They are divided into categories like grains, oil, livestock, metals and energy. Commodities are considered a separate asset class from stocks and bonds because their pricing is driven by different factors like supply and demand. Commodities are traded through exchanges using futures contracts which help reduce risks like counterparty risk and credit risk compared to forwards. Investors can participate in commodities markets as hedgers to reduce price risk, speculators to profit from price changes, or arbitrageurs seeking opportunities from pricing differences. Commodity indices track overall price movements and allow for derivative trading and easier investment compared to physical commodities.
D 00 derivatives introduction
Derivatives have become extremely important in finance over the last forty years. They derive their value from an underlying asset like a stock or commodity. The most commonly used derivatives are futures contracts, options contracts, and forward contracts. Futures and options are generally traded on exchanges while forwards are over-the-counter. Exchanges ensure standardized contracts and trading while over-the-counter allows customization but with dispute risk. Traders use derivatives for hedging to protect asset values, speculation to profit from price movements, or arbitrage to exploit temporary price mismatches. Derivatives require understanding to use properly given associated risks.
Lecturas
Chicago became a commercial center in the 1840s with railroads and telegraph connecting it to the East. The McCormick reaper led to higher wheat production in the Midwest. Farmers brought wheat to Chicago to sell to dealers who shipped it nationwide. In 1848, a central market opened where farmers and dealers could trade wheat for immediate cash delivery, which evolved into the first futures contracts where parties would agree to prices and amounts of wheat to exchange in the future. Speculators with no intention of delivery began trading the contracts, hoping to profit from price changes.
Derivatives
Derivatives are financial instruments whose value is based on an underlying asset. There are several types of derivatives including options, futures, swaps, and warrants. Options give the holder the right but not obligation to buy or sell the underlying asset. Warrants are similar to options and allow holders to purchase stock from the issuing company at a specified price. Derivatives can be used for hedging risk, speculation, and gaining leverage. They are valued using models like Black-Scholes or by their market price on exchanges.
basic05 important notes for MBA and BBA
Derivative securities are financial instruments whose value is linked to an underlying asset. The document discusses various types of derivative contracts including forwards, futures, options, and swaps. Forwards involve an agreement to exchange an asset at a predetermined price on a future date. Futures contracts are standardized forwards that are exchange-traded. Options provide the right but not obligation to buy or sell the underlying asset. Swaps involve exchanging cash flows of one party's financial instrument for those of another party. These derivatives allow firms to hedge risks like currency and interest rate fluctuations.
A traders guide to futures.pdf
The document is a guide to trading futures that provides an overview of futures markets and how to get started trading futures. It discusses that CME Group offers the widest range of tradable products on a single platform across different asset classes. It provides centralized global exchange for transparent pricing and access around the clock. CME Clearing also provides leading derivatives clearing and ensures the financial integrity of the markets. The guide contains sections on what futures are, who trades futures, why trade futures, how a trade works, and how to get started trading futures.
Introductory presentation on commodity trading
An introduction to Commodities Markets, Futures and other derivatives. Comparison of commodities with other asset classes and why commodity trading is indispensable for any country.