The document defines derivatives and discusses different types of derivative contracts. It explains that a forward contract involves an obligation to buy or sell an asset at a future date for a specified price, while a futures contract is similar but traded on an exchange. There are two main types of options: calls, which give the holder the right to buy an asset, and puts, which give the holder the right to sell an asset. The document also identifies three types of participants in derivatives markets: hedgers use derivatives to reduce risk, speculators use them to bet on price movements, and arbitrageurs take offsetting positions to lock in risk-free profits from temporary price discrepancies.
An interest rate future is a futures contract between the buyer and seller to deliver an interest bearing asset, that allows the buyer and seller to lock in the price of the interest bearing asset for a future date.
Interest rate futures are used to hedge against interest rate risk. Investors can use Eurodollar futures to secure an interest rate for money it plans to borrow or lend in the future. This presentation gives an overview of interest rate future product and pricing model. You find more presentations at http://www.finpricing.com/productList.html
An interest rate future is a futures contract between the buyer and seller to deliver an interest bearing asset, that allows the buyer and seller to lock in the price of the interest bearing asset for a future date.
Interest rate futures are used to hedge against interest rate risk. Investors can use Eurodollar futures to secure an interest rate for money it plans to borrow or lend in the future. This presentation gives an overview of interest rate future product and pricing model. You find more presentations at http://www.finpricing.com/productList.html
Want to understand how options work but don\'t have time to go through books? Read this presentation I prepared with couple of my classmates for a case study in Advanced Finance at AIM
This is a powerpoint presentation prepared by me... explaining about IMC plans of Coca cola Inc. This is very useful for presentations in colleges, MBA institutes etc. Send your suggestions and likes on my email id- a380onkar@yahoo.co.in
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,
DIFFERENCE BETWEEN CASH MARKET AND DERIVATIVES MARKETSudharshanE1
DIFFERENCE BETWEEN CASH MARKET AND DERIVATIVES MARKET.A cash market is a marketplace for the immediate settlement of transactions involving commodities and securities.
14 Option MarketsCHAPTER OBJECTIVESThe specific objectives of .docxaulasnilda
14 Option Markets
CHAPTER OBJECTIVES
The specific objectives of this chapter are to:
· ▪ provide a background on options,
· ▪ explain why stock option premiums vary,
· ▪ explain how stock options are used to speculate,
· ▪ explain how stock options are used to hedge,
· ▪ explain the use of stock index options, and
· ▪ explain the use of options on futures.
14-1 BACKGROUND ON OPTIONS
Options are classified as calls or puts. A call option grants the owner the right to purchase a specified financial instrument (such as a stock) for a specified price (called the exercise price or strike price) within a specified period of time.
A call option is said to be in the money when the market price of the underlying security exceeds the exercise price, at the money when the market price is equal to the exercise price, and out of the money when it is below the exercise price.
The second type of option is known as a put option. It grants the owner the right to sell a specified financial instrument for a specified price within a specified period of time. As with call options, owners pay a premium to obtain put options. They can exercise the options at any time up to the expiration date but are not obligated to do so.
A put option is said to be “in the money” when the market price of the underlying security is below the exercise price, “at the money” when the market price is equal to the exercise price, and “out of the money” when it exceeds the exercise price.
Call and put options specify 100 shares for the stocks to which they are assigned. Premiums paid for call and put options are determined by the participants engaged in trading. The premium for a particular option changes over time as it becomes more or less desirable to traders.
Participants can close out their option positions by making an offsetting transaction. For example, purchasers of an option can offset their positions at any time by selling an identical option. The gain or loss is determined by the premium paid when purchasing the option versus the premium received when selling an identical option. Sellers of options can close out their positions at any time by purchasing an identical option.
WEB
www.cboe.com
The volume of calls versus the volume of puts are used to assess their respective popularity.
The stock options just described are known as American-style stock options. They can be exercised at any time until the expiration date. In contrast, European-style stock options can be exercised only just before expiration.
In addition to options on stocks there are options on stock indexes, which allow investors the right to buy (with a call option) or sell (with a put option) a specified stock index for a specified price up to a specified expiration date. There are also options on interest rate futures contracts, which allow investors the right to buy or sell a specified interest rate futures contract for a specified price up to a specified expiration date. Options on stoc ...
Describes what derivatives are and explains the differences between over-the-counter and exchange traded derivatives, Identifies types of underlying assets on which derivatives are based, describes participants in and uses of derivative trading, describe what options are and how they are traded, evaluates call and put option strategies for
individual and in-stitutional investors and corporations, describes what forwards are, distinguishing futures contracts from forward agreements, evaluate futures strategies for investors and corporations, Define and describe rights and warrants, explain why they are issued, and calculate the value of rights and warrants
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.
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
2024.06.01 Introducing a competency framework for languag learning materials ...Sandy Millin
http://sandymillin.wordpress.com/iateflwebinar2024
Published classroom materials form the basis of syllabuses, drive teacher professional development, and have a potentially huge influence on learners, teachers and education systems. All teachers also create their own materials, whether a few sentences on a blackboard, a highly-structured fully-realised online course, or anything in between. Despite this, the knowledge and skills needed to create effective language learning materials are rarely part of teacher training, and are mostly learnt by trial and error.
Knowledge and skills frameworks, generally called competency frameworks, for ELT teachers, trainers and managers have existed for a few years now. However, until I created one for my MA dissertation, there wasn’t one drawing together what we need to know and do to be able to effectively produce language learning materials.
This webinar will introduce you to my framework, highlighting the key competencies I identified from my research. It will also show how anybody involved in language teaching (any language, not just English!), teacher training, managing schools or developing language learning materials can benefit from using the framework.
Honest Reviews of Tim Han LMA Course Program.pptxtimhan337
Personal development courses are widely available today, with each one promising life-changing outcomes. Tim Han’s Life Mastery Achievers (LMA) Course has drawn a lot of interest. In addition to offering my frank assessment of Success Insider’s LMA Course, this piece examines the course’s effects via a variety of Tim Han LMA course reviews and Success Insider comments.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
2. Introduction
A derivative= A financial instrument
Forward, futures, options and swaps
markets
Hedgers, speculators, and arbitrageurs
3. A derivative can be define as a financial
instrument whose value depends on (or
derives from) the values of other, more basic,
underlying variables.
Very often the variables underlying derivatives
are the prices of traded assets. However,
derivatives can be dependent on almost any
variable.
5. A derivatives exchange is a market where individuals
trade standardized contracts that have been defined by the
exchange. Derivatives exchanges have existed for a long
time. The Chicago Board of Trade (CBOT) was established
in 1848 to bring farmers and merchants together. Initially
its main task was to standardize the quantities and qualities
of the grains that were traded. Within a few years the first
futures-type contract was developed. It was known as a to-
arrive contract. Speculators soon became interested in the
contract and found trading the contract to be an attractive
alternative to trading the grain itself. A rival futures
exchange, the Chicago Mercantile Exchange (CME), was
established in 1919. Now futures exchanges exist all over
the world.
6. Electronic markets
Traditionally derivatives exchanges have used what is
known as the open outcry system. This involves traders
physically meeting on the floor of the exchange, shouting,
and using a complicated set of hand signals to indicate the
trades they would like to carry out. Exchanges are
increasingly replacing the open outcry system by
electronic trading. This involves traders entering their
desired trades at a key board and a computer being used
to match buyers and sellers. The open outcry system has
its advocates, but, as time passes, it is becoming less and
less common.
8. Over-the-counter markets
The over-the-counter market is an important alternative to
exchanges and measured in terms of the total volume of
trading, has become much larger than the exchange-
traded market.
It is a telephone- and computer-linked network of dealers.
Trades are done over the phone and are usually between
two financial institutions or between a financial
institution and one of its clients.
9. Trades in the over- the-counter market are
typically much larger than trades in the exchange-
traded market. A key advantage of the over-the-
counter market is that the terms of a contract do
not have to be those specified by an exchange.
Market participants are free to negotiate any
mutually attractive deal. A disadvantage is that
there is usually some credit risk in an over-the-
counter trade.
10. Market size
Both the over-the counter and the exchange-
traded market for derivative are huge.
11. Forward contracts
Introduction of forward contracts
Difference with spot contracts
In over-the-counter market
Long & short position
On foreign exchange
Payoffs from forward contracts
Forward prices and delivery prices
12. Forward contracts
Forward contract is relatively a simple derivative.
It is an agreement to buy or sell an asset at a
certain future time for a certain price.
It can be contrasted with a spot contract, which is
an agreement to buy or sell an asset today.
13. Forward contracts
A forward contract is traded in the over-the-
counter market—usually between two financial
institutions or between a financial institution and
one of its clients.
14. Forward contracts
One of the parties to a forward contract assumes a
long position and agrees to buy the underlying
asset on a certain specified future date for a
certain specified price.
The other party assumes a short position and
agrees to sell the asset on the same date for the
same price.
15. Forward contracts
Forward contracts on foreign exchange are very
popular, and can be used to hedge foreign
currency risk.
16. Payoffs from forward contracts
The payoff from a long position in a forward
contract on one unit of an asset is
S - K
The payoff from a short position in a forward
contract on one unit of an asset is
K - S
17.
18. Futures contracts
Define of futures contracts
The largest exchanges
Commodities
Different with forward contract
19. Futures contracts
A futures contract is an agreement between
two parties to buy or sell an asset at a certain
time in the future for a certain price.
Unlike forward contracts, futures contracts are
normally traded on an exchange.
To make trading possible, the exchange specifies
certain standardized features of the contract.
20. Futures contracts
The largest exchanges on which futures contracts
traded are the CBOT and CME.
21. Options
Traded market
Types of option
Exercise price & expiration date
American & European options
Four types of participants in options markets
22. Options
Options are traded both on exchanges and in the
over-the-counter market.
There are two types of option:
Call option gives the holder the right to buy the
underlying asset by a certain date for a certain
price.
Put option gives the holder the right to sell the
underlying asset by a certain date for a certain
price.
23. Options
The price in the contract is known as the exercise
price or strike price.
The date in the contract is known as the
expiration date or maturity.
24. Options
American options can be exercised at any time up
to the expiration date.
European options can be exercised only on the
expiration date itself.
Most of the options that are traded on exchanges
are American.
25. There are four types of participants in
options markets:
1. Buyers of calls
2. Seller of calls
3. Buyer of puts
4. Seller of puts
28. Types of traders
Hedgers use derivatives to reduce the risk that
they face from potential future movements in a
market variable.
29. Types of traders
Speculators use them to bet on the future
direction of a market variable.
30. Types of traders
Arbitrageurs take offsetting positions in two or
more instruments to lock in a profit.
31. Summary
A forward or futures contract involves an
obligation to buy or sell an asset at a certain time
in the future for a certain price.
There are two types of options: calls and puts.
A call option gives the holder the right to buy an
asset by a certain date for a certain price.
A put option gives the holder the right to sell an
asset by a certain date for a certain price.
32. Three main types of traders can be identified:
hedgers, speculators, and arbitrageurs.
Hedgers are in the position where they face risk
associated with the price of an asset. They use
derivatives to reduce or eliminate this risk.
Speculators wish to bet on future movements in
the price of an asset. They use derivatives to get
extra leverage.
Arbitrageurs are in business to take advantage of
a discrepancy between prices in two different
markets.