Financial Derivatives
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This document provides an overview of financial derivatives. It defines derivatives as financial instruments whose value is derived from an underlying asset such as stocks, commodities, currencies, or interest rates. The document outlines the main types of derivatives which are forwards, futures, options, and swaps. It also discusses the various market players involved in derivatives trading and provides statistics on the growth of derivatives trading in India. The overall purpose is to introduce the basic concepts of financial derivatives.
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Chapter 02 the derivatives market in india
The document discusses the derivatives market in India. It describes how derivatives were originally traded over-the-counter but exchanges were later created to provide transparency, reduce counterparty risk, and increase regulation. It then outlines the major derivatives exchanges in India and the types of derivatives contracts available, including those for commodities, equities, interest rates, and currencies. Finally, it explains the key components of how derivatives are traded on exchanges, including the order matching process, clearing, margins, and daily and final settlement.
Derivatives
Derivatives are financial contracts whose value is dependent on an underlying asset. There are several types of derivatives including forwards, futures, options, and swaps. Derivatives allow participants to hedge risks, speculate, or engage in arbitrage. Derivatives can be exchange-traded or over-the-counter. Common derivatives include commodity derivatives, financial derivatives, and complex derivatives involving interest rates. Forwards, futures, options, and swaps each have unique features regarding trading, settlement, and valuation. Overall, derivatives help investors and businesses manage risks in global financial markets.
Derivatives
A derivative is a financial security with a value that is reliant upon or derived from an underlying asset or group of assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.
Derivatives can either be traded over-the-counter (OTC) or on an exchange. OTC derivatives constitute the greater proportion of derivatives in existence and are unregulated, whereas derivatives traded on exchanges are standardized. OTC derivatives generally have greater risk for the counterparty than do standardized derivatives.
Financial derivatives
1) A derivative is a financial security whose value is based on an underlying asset such as a stock, bond, commodity, currency, interest rate, or market index. Common types of derivatives are forwards, futures, options, and swaps.
2) Forwards and futures are contracts that obligate the buyer and seller to perform the contract at a specified price on a future date. Options give the buyer the right but not the obligation to buy or sell the underlying asset. Swaps involve exchanging cash flows between two parties.
3) People use derivatives for hedging risk, speculation, and arbitrage opportunities between markets. Hedgers aim to protect investments, while speculators take risks to earn profits from
Derivatives - Basics of Derivatives contract covered in this ppt
Derivatives - Basics of Derivatives including forward, futures, swap and options contracts which covers HISTORY OF DERIVATIVES, CHARACTERISTICS OF DERIVATIVES , FEATURES OF DERIVATIVES, FUNCTIONS OF DERIVATIVES MARKET, USES OF DERIVATIVES, DIFFERENCE BETWEEN SHARES AND DERIVATIVES SHARES DERIVATIVES, DEFINITION OF UNDERLYING ASSET, DERIVATIVES ADVANTAGES AND DISADVANTAGES, PARTICIPANTS/ TRADERS IN DERIVATIVES MARKET, SPECULATORS, ARBITRAGEURS, HEDGER
Subscribe to Vision Academy for Video assistance
https://www.youtube.com/channel/UCjzpit_cXjdnzER_165mIiw
A study of derivatives ppt
The document discusses various derivatives strategies. It defines a derivative as a security whose price is derived from underlying assets such as stocks, bonds, commodities, currencies, interest rates, and market indexes. The main types of derivatives discussed are forwards, futures, options, and swaps. Forwards and futures are contracts to buy or sell an asset at a future date. Options provide the right but not obligation to buy or sell an asset. Swaps involve exchanging cash flows over time, such as interest rate or currency swaps. The document also analyzes the P/E ratio, P/B ratio, and dividend yield of Nifty 50 companies over different time periods to predict market trends.
Derivatives trading
This document provides an overview of derivatives markets, including forwards, futures, and options contracts. It defines each contract type and explains how they work. Forwards involve a private agreement between two parties to buy or sell an asset at a future date at an agreed upon price. Futures are standardized forward contracts that are traded on an exchange. Options provide the right, but not obligation, to buy or sell the underlying asset. The document discusses participants in these markets including hedgers who aim to reduce risk, speculators who take bets on price movements, and arbitrageurs who exploit temporary price differences. It also provides illustrations of how these contracts can be used for hedging or trading purposes.
Derivatives
Derivatives are financial contracts whose value is derived from an underlying asset. The three main types are forwards, futures, and options. Forwards and futures obligate the buyer to purchase an asset at a future date at a preset price. Options provide the right, but not obligation, for the buyer to purchase or sell the asset. Derivatives allow participants to hedge or speculate on price movements in the underlying asset. Major global futures exchanges include CME, CBOT, NYMEX, and EUREX.
Recommended
Chapter 02 the derivatives market in india
The document discusses the derivatives market in India. It describes how derivatives were originally traded over-the-counter but exchanges were later created to provide transparency, reduce counterparty risk, and increase regulation. It then outlines the major derivatives exchanges in India and the types of derivatives contracts available, including those for commodities, equities, interest rates, and currencies. Finally, it explains the key components of how derivatives are traded on exchanges, including the order matching process, clearing, margins, and daily and final settlement.
Derivatives
Derivatives are financial contracts whose value is dependent on an underlying asset. There are several types of derivatives including forwards, futures, options, and swaps. Derivatives allow participants to hedge risks, speculate, or engage in arbitrage. Derivatives can be exchange-traded or over-the-counter. Common derivatives include commodity derivatives, financial derivatives, and complex derivatives involving interest rates. Forwards, futures, options, and swaps each have unique features regarding trading, settlement, and valuation. Overall, derivatives help investors and businesses manage risks in global financial markets.
Derivatives
A derivative is a financial security with a value that is reliant upon or derived from an underlying asset or group of assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.
Derivatives can either be traded over-the-counter (OTC) or on an exchange. OTC derivatives constitute the greater proportion of derivatives in existence and are unregulated, whereas derivatives traded on exchanges are standardized. OTC derivatives generally have greater risk for the counterparty than do standardized derivatives.
Financial derivatives
1) A derivative is a financial security whose value is based on an underlying asset such as a stock, bond, commodity, currency, interest rate, or market index. Common types of derivatives are forwards, futures, options, and swaps.
2) Forwards and futures are contracts that obligate the buyer and seller to perform the contract at a specified price on a future date. Options give the buyer the right but not the obligation to buy or sell the underlying asset. Swaps involve exchanging cash flows between two parties.
3) People use derivatives for hedging risk, speculation, and arbitrage opportunities between markets. Hedgers aim to protect investments, while speculators take risks to earn profits from
Derivatives - Basics of Derivatives contract covered in this ppt
Derivatives - Basics of Derivatives including forward, futures, swap and options contracts which covers HISTORY OF DERIVATIVES, CHARACTERISTICS OF DERIVATIVES , FEATURES OF DERIVATIVES, FUNCTIONS OF DERIVATIVES MARKET, USES OF DERIVATIVES, DIFFERENCE BETWEEN SHARES AND DERIVATIVES SHARES DERIVATIVES, DEFINITION OF UNDERLYING ASSET, DERIVATIVES ADVANTAGES AND DISADVANTAGES, PARTICIPANTS/ TRADERS IN DERIVATIVES MARKET, SPECULATORS, ARBITRAGEURS, HEDGER
Subscribe to Vision Academy for Video assistance
https://www.youtube.com/channel/UCjzpit_cXjdnzER_165mIiw
A study of derivatives ppt
The document discusses various derivatives strategies. It defines a derivative as a security whose price is derived from underlying assets such as stocks, bonds, commodities, currencies, interest rates, and market indexes. The main types of derivatives discussed are forwards, futures, options, and swaps. Forwards and futures are contracts to buy or sell an asset at a future date. Options provide the right but not obligation to buy or sell an asset. Swaps involve exchanging cash flows over time, such as interest rate or currency swaps. The document also analyzes the P/E ratio, P/B ratio, and dividend yield of Nifty 50 companies over different time periods to predict market trends.
Derivatives trading
This document provides an overview of derivatives markets, including forwards, futures, and options contracts. It defines each contract type and explains how they work. Forwards involve a private agreement between two parties to buy or sell an asset at a future date at an agreed upon price. Futures are standardized forward contracts that are traded on an exchange. Options provide the right, but not obligation, to buy or sell the underlying asset. The document discusses participants in these markets including hedgers who aim to reduce risk, speculators who take bets on price movements, and arbitrageurs who exploit temporary price differences. It also provides illustrations of how these contracts can be used for hedging or trading purposes.
Derivatives
Derivatives are financial contracts whose value is derived from an underlying asset. The three main types are forwards, futures, and options. Forwards and futures obligate the buyer to purchase an asset at a future date at a preset price. Options provide the right, but not obligation, for the buyer to purchase or sell the asset. Derivatives allow participants to hedge or speculate on price movements in the underlying asset. Major global futures exchanges include CME, CBOT, NYMEX, and EUREX.
Financial derivatives ppt
A derivative is a financial instrument whose value is derived from the value of another asset, known as the underlying. There are three main types of traders in the derivatives market: hedgers who use derivatives to reduce risk, speculators who trade for profits, and arbitrageurs who take advantage of price discrepancies across markets. Derivatives can be traded over-the-counter (OTC) or on an exchange, and provide various economic benefits such as risk reduction and enhanced market liquidity.
Hedging & arbitrage
A hedge is an investment position intended to offset potential losses/gains that
may be incurred by a companion investment. In simple language, a hedge is
used to reduce any substantial losses/gains suffered by an individual or an
organization.
A hedge can be constructed from many types of financial instruments, including
stocks, exchange-traded funds, insurance, forward contracts, swaps, options,
many types of over-the-counter and derivative products, and futures contracts.
Public futures markets were established in the 19th century[1] to allow
transparent, standardized, and efficient hedging of agricultural commodity
prices; they have since expanded to include futures contracts for hedging the
values of energy, precious metals, foreign currency, and interest rate
fluctuations.
A study about derivative market in india.
This document summarizes a study of the derivative market in India conducted by Sudarsan Prasad for Prof. S. K. Sarangi. It provides an overview of LKP Securities Ltd and describes the objectives of the study, research methodology, analysis of derivative products like futures and options, and key findings. The study aimed to analyze trends in the derivative market and the role of derivatives in the Indian market. It found that derivatives help transfer risk and that futures and options can benefit a wide range of participants when used appropriately.
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This document discusses speculation and speculators. It defines speculation as attempting to profit from anticipated price movements rather than long-term investment. There are four types of speculators: bulls anticipate price rises; bears anticipate declines; stags cautiously invest in new issues; lame ducks struggle when unable to meet commitments. Speculative transactions include options, margin trading, arbitrage, wash sales, and cornering/rigging markets. Speculation provides liquidity and risk-bearing but can also cause bubbles and volatility.
Derivatives lecture1& 2-introduction
Derivatives are financial instruments that derive their value from an underlying asset such as currencies, commodities, stocks or bonds. Common types of derivatives include forwards, futures, options, and swaps. Forwards and futures are agreements to buy or sell an asset at a future date for a predetermined price, while options provide the right but not obligation to buy or sell an asset. Swaps involve exchanging cash flows of financial instruments. Derivatives allow investors to hedge risk or speculate on changes in prices. They are traded on exchanges or over-the-counter.
Unit i
Derivatives are financial instruments whose value is derived from an underlying asset such as stocks, bonds, commodities, currencies, or market indexes. There are several types of derivatives including forwards, futures, options, and swaps. Derivatives allow investors to hedge risk or speculate on the future price of the underlying asset. While derivatives can be used to manage various risks, they also pose risks such as increased speculation, greater financial instability, and price instability if not properly regulated. Effective risk management including policies, oversight, and competency is needed to use derivatives safely.
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The document provides an introduction to derivatives markets. It defines derivatives as financial instruments whose value is derived from an underlying asset. It describes different types of derivatives including futures, forwards, options, and swaps. It explains how these derivatives can be used for hedging, speculation, and arbitrage. It also discusses major derivatives exchanges and over-the-counter markets.
Derivatives
The document discusses derivatives, which are financial instruments whose value is based on an underlying asset. It covers various types of derivatives like futures, forwards, swaps, and options. Futures are standardized contracts to buy or sell an asset at a future date, while forwards involve customized non-standardized contracts. Swaps involve exchanging cash flows between two parties. Options give the holder the right but not obligation to buy or sell the underlying asset.
Derivatives
This document defines and explains various types of derivatives such as forwards, futures, options, and swaps. It discusses how derivatives derive their value from underlying assets like stocks, bonds, currencies, and commodities. Key points covered include how derivatives work, common uses of derivatives for hedging, speculation, and arbitrage, and examples of different derivative products and markets. News snippets at the end summarize the introduction of new derivative indexes in India relating to public sector companies and infrastructure stocks, as well as a new cash-futures spread product.
Futures and Options
The document discusses the derivative market in India and risk management in banks. It defines derivatives and their various types like futures, options, and swaps. It explains how derivatives help banks manage risks like credit risk, interest rate risk, and liquidity risk. The history of derivatives trading in India is also summarized dating back to 1875. Key players in the market like hedgers, speculators, and arbitrageurs are identified along with their roles.
Presentation on Derivatives by Mr. Nayan Parikh to L&t baroda
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The document provides an introduction to derivatives presented by Nayan Parikh. It discusses the origin of derivatives dating back over 2000 years, the emergence of modern financial derivatives post-1970, and defines derivatives as contracts that derive their value from an underlying asset. It also outlines the key characteristics of over-the-counter derivatives markets and types of derivatives including futures, options, and their mechanisms.
Financial instruments derivatives ppt @ bec doms bagalkot mba finance
The document discusses various types of financial derivatives, including futures, forwards, options, and swaps. Futures and forwards are contracts that obligate the buyer to purchase an asset at a predetermined price and date in the future. Options provide the right but not the obligation to buy or sell an asset. Swaps involve an agreement between two parties to exchange a series of cash flows over time. Derivatives allow parties to hedge against risk, speculate on price movements, and increase market liquidity.
Hedging
This document discusses hedging and hedge funds. It defines hedging as using tools like derivatives to reduce losses from negative events. It provides examples of common hedging instruments like forward contracts, futures contracts, and options. It then discusses the history of hedge funds, starting from Alfred Jones in the 1940s and important funds today like Goldman Sachs, Long Term Capital Management, Man Group, and Soros Fund Management. The document aims to explain hedging concepts and provide an overview of hedge funds.
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Presented Saturday, Feb 14 as part of the Support Workshop for CMU's first Credit Suisse Trading Challenge.
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The document discusses various types of derivatives including forwards, futures, and options. It provides examples of how farmers, manufacturers, importers and exporters can use these derivatives to hedge against risk. Forwards involve a contractual obligation to buy or sell an asset at a future date at a pre-determined price. Futures are similar but are exchange-traded with standardized contracts and daily mark-to-market settlements. Options provide the right but not obligation to buy or sell an asset and offer more flexibility than forwards and futures.
Investment Banking
This document provides an introduction to financial derivatives. It defines derivatives as financial instruments whose price is dependent on an underlying asset. Common underlying assets include stocks, bonds, commodities, currencies, and interest rates. Derivatives allow parties to mitigate risks related to price movements of these assets. The document discusses various types of derivatives including forwards, futures, options, and swaps. It also covers key concepts like hedging strategies, margin requirements, and historic derivative-related failures like Barings Bank and Metallgesellschaft.
FESE Capital Markets Academy - Derivatives and CCPs
Slides used in module 2 - on derivatives and CCPs - of the second edition of FESE's Capital Markets Academy
Learning derivative1 microsec_280612
The derivatives market in India began in 2000 with the introduction of index future contracts. The total turnover increased substantially between 2001-2002 and 2006-2007. There are four main types of derivative instruments traded on Indian equity markets: index futures, index options, stock futures, and stock options. Index futures have the highest turnover. A derivative is a financial instrument whose value is based on an underlying asset such as a stock, commodity, currency, or index. The major derivative products are forwards, futures, options, and swaps.
Derivatives Basics
Futures and options are the most common types of derivatives used in financial markets. Futures involve a contract where the buyer and seller agree to a deal at a future date at a pre-decided price, obligating both parties. Options give the buyer the right, but not the obligation, to buy or sell the underlying asset at a future date at a pre-decided price, in exchange for paying a premium to the seller who is obligated. Derivatives allow investors to profit from rising or falling prices, and options allow investors to limit their losses to the premium amount.
Introduction to Derivatives
Derivative is a product whose value is derived from the value of one or more basic underlying variables. Refer to the presentation for more information on derivatives.
Derivatives kotak 2010
Derivatives are financial instruments that derive their value from an underlying asset such as stocks, bonds, commodities, currencies, interest rates, or market indexes. The three main types of derivatives are futures, options, and swaps. Derivatives allow participants to transfer risk from those who want to hedge it to those who are willing to take on risk for profit or speculation. Over the past few decades, derivatives markets have experienced tremendous growth due to factors like increased volatility, globalization of markets, improved technology, and sophisticated risk management tools. Derivatives serve important economic functions like facilitating price discovery, enabling risk transfer, increasing liquidity in underlying markets, and attracting entrepreneurial activity.
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Financial derivatives ppt
A derivative is a financial instrument whose value is derived from the value of another asset, known as the underlying. There are three main types of traders in the derivatives market: hedgers who use derivatives to reduce risk, speculators who trade for profits, and arbitrageurs who take advantage of price discrepancies across markets. Derivatives can be traded over-the-counter (OTC) or on an exchange, and provide various economic benefits such as risk reduction and enhanced market liquidity.
Hedging & arbitrage
A hedge is an investment position intended to offset potential losses/gains that
may be incurred by a companion investment. In simple language, a hedge is
used to reduce any substantial losses/gains suffered by an individual or an
organization.
A hedge can be constructed from many types of financial instruments, including
stocks, exchange-traded funds, insurance, forward contracts, swaps, options,
many types of over-the-counter and derivative products, and futures contracts.
Public futures markets were established in the 19th century[1] to allow
transparent, standardized, and efficient hedging of agricultural commodity
prices; they have since expanded to include futures contracts for hedging the
values of energy, precious metals, foreign currency, and interest rate
fluctuations.
A study about derivative market in india.
This document summarizes a study of the derivative market in India conducted by Sudarsan Prasad for Prof. S. K. Sarangi. It provides an overview of LKP Securities Ltd and describes the objectives of the study, research methodology, analysis of derivative products like futures and options, and key findings. The study aimed to analyze trends in the derivative market and the role of derivatives in the Indian market. It found that derivatives help transfer risk and that futures and options can benefit a wide range of participants when used appropriately.
Speculators - Meaning, Types, Speculative Transactions, Advantages and Limita...
This document discusses speculation and speculators. It defines speculation as attempting to profit from anticipated price movements rather than long-term investment. There are four types of speculators: bulls anticipate price rises; bears anticipate declines; stags cautiously invest in new issues; lame ducks struggle when unable to meet commitments. Speculative transactions include options, margin trading, arbitrage, wash sales, and cornering/rigging markets. Speculation provides liquidity and risk-bearing but can also cause bubbles and volatility.
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Derivatives are financial instruments that derive their value from an underlying asset such as currencies, commodities, stocks or bonds. Common types of derivatives include forwards, futures, options, and swaps. Forwards and futures are agreements to buy or sell an asset at a future date for a predetermined price, while options provide the right but not obligation to buy or sell an asset. Swaps involve exchanging cash flows of financial instruments. Derivatives allow investors to hedge risk or speculate on changes in prices. They are traded on exchanges or over-the-counter.
Unit i
Derivatives are financial instruments whose value is derived from an underlying asset such as stocks, bonds, commodities, currencies, or market indexes. There are several types of derivatives including forwards, futures, options, and swaps. Derivatives allow investors to hedge risk or speculate on the future price of the underlying asset. While derivatives can be used to manage various risks, they also pose risks such as increased speculation, greater financial instability, and price instability if not properly regulated. Effective risk management including policies, oversight, and competency is needed to use derivatives safely.
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The document provides an introduction to derivatives markets. It defines derivatives as financial instruments whose value is derived from an underlying asset. It describes different types of derivatives including futures, forwards, options, and swaps. It explains how these derivatives can be used for hedging, speculation, and arbitrage. It also discusses major derivatives exchanges and over-the-counter markets.
Derivatives
The document discusses derivatives, which are financial instruments whose value is based on an underlying asset. It covers various types of derivatives like futures, forwards, swaps, and options. Futures are standardized contracts to buy or sell an asset at a future date, while forwards involve customized non-standardized contracts. Swaps involve exchanging cash flows between two parties. Options give the holder the right but not obligation to buy or sell the underlying asset.
Derivatives
This document defines and explains various types of derivatives such as forwards, futures, options, and swaps. It discusses how derivatives derive their value from underlying assets like stocks, bonds, currencies, and commodities. Key points covered include how derivatives work, common uses of derivatives for hedging, speculation, and arbitrage, and examples of different derivative products and markets. News snippets at the end summarize the introduction of new derivative indexes in India relating to public sector companies and infrastructure stocks, as well as a new cash-futures spread product.
Futures and Options
The document discusses the derivative market in India and risk management in banks. It defines derivatives and their various types like futures, options, and swaps. It explains how derivatives help banks manage risks like credit risk, interest rate risk, and liquidity risk. The history of derivatives trading in India is also summarized dating back to 1875. Key players in the market like hedgers, speculators, and arbitrageurs are identified along with their roles.
Presentation on Derivatives by Mr. Nayan Parikh to L&t baroda
No
-
24
24
Rs. 216
Yes
(24)
24
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Rs. 0
Yes
(240)
24
(216)
The document provides an introduction to derivatives presented by Nayan Parikh. It discusses the origin of derivatives dating back over 2000 years, the emergence of modern financial derivatives post-1970, and defines derivatives as contracts that derive their value from an underlying asset. It also outlines the key characteristics of over-the-counter derivatives markets and types of derivatives including futures, options, and their mechanisms.
Financial instruments derivatives ppt @ bec doms bagalkot mba finance
The document discusses various types of financial derivatives, including futures, forwards, options, and swaps. Futures and forwards are contracts that obligate the buyer to purchase an asset at a predetermined price and date in the future. Options provide the right but not the obligation to buy or sell an asset. Swaps involve an agreement between two parties to exchange a series of cash flows over time. Derivatives allow parties to hedge against risk, speculate on price movements, and increase market liquidity.
Hedging
This document discusses hedging and hedge funds. It defines hedging as using tools like derivatives to reduce losses from negative events. It provides examples of common hedging instruments like forward contracts, futures contracts, and options. It then discusses the history of hedge funds, starting from Alfred Jones in the 1940s and important funds today like Goldman Sachs, Long Term Capital Management, Man Group, and Soros Fund Management. The document aims to explain hedging concepts and provide an overview of hedge funds.
Terminologies of Derivatives
Presented Saturday, Feb 14 as part of the Support Workshop for CMU's first Credit Suisse Trading Challenge.
Derivatives
The document discusses various types of derivatives including forwards, futures, and options. It provides examples of how farmers, manufacturers, importers and exporters can use these derivatives to hedge against risk. Forwards involve a contractual obligation to buy or sell an asset at a future date at a pre-determined price. Futures are similar but are exchange-traded with standardized contracts and daily mark-to-market settlements. Options provide the right but not obligation to buy or sell an asset and offer more flexibility than forwards and futures.
Investment Banking
This document provides an introduction to financial derivatives. It defines derivatives as financial instruments whose price is dependent on an underlying asset. Common underlying assets include stocks, bonds, commodities, currencies, and interest rates. Derivatives allow parties to mitigate risks related to price movements of these assets. The document discusses various types of derivatives including forwards, futures, options, and swaps. It also covers key concepts like hedging strategies, margin requirements, and historic derivative-related failures like Barings Bank and Metallgesellschaft.
FESE Capital Markets Academy - Derivatives and CCPs
Slides used in module 2 - on derivatives and CCPs - of the second edition of FESE's Capital Markets Academy
Learning derivative1 microsec_280612
The derivatives market in India began in 2000 with the introduction of index future contracts. The total turnover increased substantially between 2001-2002 and 2006-2007. There are four main types of derivative instruments traded on Indian equity markets: index futures, index options, stock futures, and stock options. Index futures have the highest turnover. A derivative is a financial instrument whose value is based on an underlying asset such as a stock, commodity, currency, or index. The major derivative products are forwards, futures, options, and swaps.
Derivatives Basics
Futures and options are the most common types of derivatives used in financial markets. Futures involve a contract where the buyer and seller agree to a deal at a future date at a pre-decided price, obligating both parties. Options give the buyer the right, but not the obligation, to buy or sell the underlying asset at a future date at a pre-decided price, in exchange for paying a premium to the seller who is obligated. Derivatives allow investors to profit from rising or falling prices, and options allow investors to limit their losses to the premium amount.
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Presentation on Derivatives by Mr. Nayan Parikh to L&t baroda
Presentation on Derivatives by Mr. Nayan Parikh to L&t baroda
Financial instruments derivatives ppt @ bec doms bagalkot mba finance
Financial instruments derivatives ppt @ bec doms bagalkot mba finance
FESE Capital Markets Academy - Derivatives and CCPs
FESE Capital Markets Academy - Derivatives and CCPs
Similar to Financial Derivatives
Introduction to Derivatives
Derivative is a product whose value is derived from the value of one or more basic underlying variables. Refer to the presentation for more information on derivatives.
Derivatives kotak 2010
Derivatives are financial instruments that derive their value from an underlying asset such as stocks, bonds, commodities, currencies, interest rates, or market indexes. The three main types of derivatives are futures, options, and swaps. Derivatives allow participants to transfer risk from those who want to hedge it to those who are willing to take on risk for profit or speculation. Over the past few decades, derivatives markets have experienced tremendous growth due to factors like increased volatility, globalization of markets, improved technology, and sophisticated risk management tools. Derivatives serve important economic functions like facilitating price discovery, enabling risk transfer, increasing liquidity in underlying markets, and attracting entrepreneurial activity.
Derivative ppt
Derivatives derive their value from underlying assets such as equities, debt, currencies, and indices. Derivatives contracts include forwards, futures, options, and swaps. Forwards and futures are agreements to buy or sell an asset at a future date, while options provide the right but not obligation to buy or sell. Swaps involve exchanging cash flows of an underlying asset. Derivatives can be used for hedging risk, speculation, or arbitrage opportunities between markets.
derivativeppt-170128122925.pdfbbbbbbbbnn
Derivatives derive their value from underlying assets like equities, debt, currencies, or indices. They are contracts that are bought and sold by individuals and institutions for various purposes. The value of a derivative changes along with the price of the underlying asset. For example, the value of a gold futures contract is based on the value of gold. Derivatives trading began in India in the late 19th century and has expanded over time to include various types of derivatives contracts traded on exchanges or over-the-counter.
Financial Derivatives
Derivatives are financial contracts whose value is based on an underlying asset such as a commodity, bond, currency or stock. They can be used for hedging risks from price movements, speculating on prices, or gaining exposure to markets. Common derivatives include forwards, futures, options, and swaps. Most are traded over-the-counter or on exchanges. Derivatives are one of the three main categories of financial instruments along with stocks and debt.
Derivatives basic concept
The document provides an overview of derivatives concepts, including the different types of derivatives contracts such as forwards, futures, swaps, and options. It discusses key terms like underlying assets, features of derivatives, and important concepts in options. The history of derivatives trading in India is covered, along with the regulatory framework and guidelines put forth by committees like the L.C. Gupta Committee and J.R. Verma Committee.
Derivatives - Classroom Presentation
The document summarizes the history and types of derivatives in India. It discusses:
- Futures trading began in India in 1875 through the Bombay Cotton trade association. The government later banned some derivatives until 1995-1999 when regulations were amended.
- Derivatives include futures, forwards, swaps, and options, whose values are derived from underlying assets. Common underlying assets include commodities, currencies, interest rates and stocks.
- The main purpose of derivatives is to transfer risk from one party to another through hedging. This allows farmers, for example, to guarantee prices and encourage investment.
Fd exam
1) Derivatives are financial contracts whose value is dependent on the behavior of an underlying asset such as a stock, index, commodity, interest rate, or currency. The two main types are futures and options.
2) Futures contracts are standardized exchange-traded contracts to buy or sell an asset at a predetermined price and date. Options contracts provide the right but not the obligation to buy or sell an asset at a predetermined strike price on or before expiration.
3) The binomial options pricing model is a numerical method used to value options using a discrete-time framework to model the varying price of the underlying asset over time. It can value American and Bermudan options and is more accurate than the
Derivatives
The emergence of the market for derivative products, most notably forwards, futures and options, can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices
Devrivatives in india
The document discusses the historical development, concepts, types, and regulation of derivatives markets in India. It provides an overview of key derivatives instruments like futures contracts, options, and swaps. The regulatory framework in India is outlined, covering regulations by SEBI and RBI. The future of derivatives markets in India is poised for growth, though trading risks like market, credit, liquidity, and operational risks must be managed.
derivatives.pdf
The document provides an overview of equity derivatives, including:
1) It defines derivatives and describes various types of derivative contracts such as forwards, futures, options, and swaps.
2) It discusses the growth of the derivatives market driven by factors like increased volatility, globalization, and technological advances.
3) It describes the roles of hedgers, speculators, and arbitrageurs in the derivatives market and the economic functions served by derivatives in price discovery, risk transfer, and market development.
4) It compares exchange-traded and over-the-counter (OTC) derivatives markets and some risks posed by OTC derivatives to financial stability.
5) It provides a
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The document provides an introduction to equity derivatives, including futures and options. It discusses the basics of derivatives such as their definition, key types of derivative contracts including forwards, futures, options, and swaps. It also outlines the participants in derivatives markets, including hedgers, speculators, and arbitrageurs. Finally, it summarizes the process for becoming a member of the BSE (Bombay Stock Exchange) derivatives segment.
Equity derivatives in bombay stock exchange
This document provides an overview of equity derivatives traded on the Bombay Stock Exchange. It discusses the structure of equity derivatives and how their prices are derived from underlying assets. It then describes the main types of equity derivatives - forwards, futures, options, warrants, LEAPS, baskets, and swaps. Requirements for trading these derivatives, such as minimum contract values and margins, are also outlined. The document concludes by discussing performance, risk management, and how investor complaints are handled.
Financial derivatives types & participants
This document discusses types of financial derivatives and their participants. It describes forwards, futures, options, and swaps. Forwards and futures are contracts to buy or sell an asset at a future date. Futures are standardized and exchange-traded, while forwards are customized over-the-counter contracts. Options provide the right to buy or sell an asset in the future. Swaps involve exchanging cash flows of interest or currencies. Derivatives are used for hedging risk, speculation, and arbitrage.
Derivatives market
The document discusses various types of derivative contracts including forwards, futures, options, and swaps. It defines each type of contract and provides examples. Key details covered include how futures contracts are exchange-traded and standardized while forwards are over-the-counter. Options give the buyer the right but not obligation to buy or sell the underlying asset. The document also discusses terminology used in derivatives and futures markets.
Financial derivatives
This document provides an introduction to financial derivatives. It defines derivatives as financial securities whose value is derived from an underlying asset. Common underlying assets include stocks, bonds, commodities, currencies, interest rates, and market indexes. Derivatives can be traded over-the-counter or on an exchange, and include futures contracts, forwards, options, and swaps. The document discusses the origins of derivatives markets in India and the advantages and disadvantages of using derivatives. It also outlines different types of market participants in derivatives markets.
Study of Derivatives in the Indian capital market
This document provides an overview of the evolution and development of the Indian capital market. It discusses how stock markets originated in major Indian cities like Bombay, Calcutta, and Madras in the late 1800s as commercial enterprises grew. The stock exchanges in these cities were formally established in the late 1800s and early 1900s. The document then outlines some of the major booms and slumps that occurred over subsequent decades in various industries like cotton, jute, tea, and coal, and how this impacted the growth of regional stock exchanges across India.
Introduction to derivatives
This document provides an overview of derivatives and forward markets. It defines derivatives as products whose value is derived from underlying variables like assets, indices, or rates. Common derivative products discussed include forwards, futures, options, and swaps. Forwards involve private contracts to buy or sell an asset at a future date, while futures are standardized exchange-traded forwards. Options provide the right but not obligation to buy or sell an asset. Swaps involve exchanging cash flows of underlying items like interest rates or currencies. The document also discusses key participants in derivatives markets like hedgers who manage risk, speculators who take positions based on price views, brokers who facilitate trades, and market makers who provide liquidity.
Derivatives
This document provides an overview of derivatives and the capital markets in India. It defines key terms like the primary and secondary markets, stock exchanges, indices, and types of derivatives like forwards, futures, options, and swaps. It describes the functions and objectives of derivatives for hedging risk and speculation. The history of derivatives trading in India is summarized, along with the major participants like hedgers, speculators, and arbitrageurs.
FINACIAL DERIVATIVE General.doc
This document provides an overview of financial derivatives. It defines derivatives as instruments whose value is derived from an underlying asset. The four main types of derivatives are forwards, futures, options, and swaps. Derivatives allow parties to transfer risks related to price fluctuations and are used for hedging and speculative purposes. While derivatives pose risks, they also serve important economic functions like facilitating price discovery and transferring risk. Derivative markets in India operate through designated exchanges and are regulated by SEBI.
Similar to Financial Derivatives (20)
Financial Derivatives
- 1. Basic Ideas of Financial Derivatives Presented by: Anupom Sarkar MBA in Finance(4th SEM’) University of Calcutta
- 2. Introduction What are Derivatives? Types of Risk Types of Derivatives Market players Derivatives Trading in India Conclusion Reference
- 3. Most individuals and Firm face financial risk due to change in exchange rate, interest rate and stock market. Financial instrument have been developed for management of such risks these instruments are known as “Financial derivatives”
- 4. The word “derivative” indicate that it has no independent value but its value is derived from value of underlying asset. In India ,The Securities Contract(Regulation) act 1956, defines a derivatives as: A contract which derives its value from the price ,or index of prices, of underlying asset.
- 5. Financial instrument and asset liability positions are broadly exposed to three type of risks: a) Exchange rate risk b) Interest rate risk c) Systematic risk
- 6. There are four types of derivatives contracts Forwards Futures Options Swaps
- 7. A forward contract is a customized contract between two counterparties ,where settlement takes place as a specific date in future at predetermined price Ex: on 10th November A enters into an agreement to buy 100kgs of wheat on 1st May of Rs.10000 from B, a farmer. It is a case of a forward contract where A has to pay Rs.10000 on 1st May to B and B has to supply 100kgs of wheat .A has taken long position assuming the price of the wheat will rise in the future. Normally traded outside exchange .
- 8. This is same as forward contracts, but it is standardize contracts. Traded through any recognized stock exchange, there is specific lot size to hold any position.
- 9. The owner of the option has option to buy or sell assets at a given price on or before given date. Option Call Put
- 10. In-the -money: For call option: P>E For put option: P<E At-the-money: For call and Put option: P=E Out-of-money For call option: E>P For Put option: E<P P=market price of underlying ,E= exercise price
- 11. Interest rate Swaps: these entail swapping only the interest related cash flows between the parties in the same currency. Currency swaps: These entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite direction .
- 12. Hedgers: Transfer of risk component of their portfolio. Speculators: Intentionally taking the risk from the hedgers in pursuit of profit. Arbitrageurs: Operating in different markets simultaneously, in pursuit of profit and eliminate mispricing.
- 13. In 1996,NSE sent a proposal to SEBI for exchange traded derivatives. In 1996.The Securities Contracts (Regulation)Act of 1956 was amended and derivatives could be declared “securities” Index futures were introduced in June 2000 and index option in 2001. NSE started trade in future and option by 2005
- 14. 0 5000000 10000000 15000000 20000000 25000000 30000000 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Turnover(cr.) Index future Stock future Index option Stock option
- 15. Derivatives allow firms and individuals to hedge risks or to bear risk at minimum cost. They can also create risk at the firm level, especially if a firm is inexperienced in their use. For the economy as a whole, the collapse of a large derivatives user or dealer may create systemic risks. On balance, derivatives plainly make the economy more efficient. However, neither users of derivatives nor their regulators can afford to be complacent.
- 16. Bhabatosh Banerjee, Financial policy and Management Accounting. W.Kolb and A.Overdahl, Future Option and Swaps. www.investopedia.com www.nseindia.com