APPLICATIONS OF FUTURES AND OPTIONS The phenomenal growth of financial derivatives across the world is attributed the fulfilment of needs of hedgers, speculators and arbitraguers by these products. In this chapter we first look at how trading futures differs from trading the…
QUESTIONS AND ANSWERS ON CHAPTER Q. Which of the following cannot be an underlying asset for financial derivative contract ? Equity Index Commodities 3.Interestrat£ 4.. Foreign Exchange A. The correct answer is NO.2. • Q. In an option contract, the…
USE OF OPTIONS IN 17th CENTURY Options made their first major mark in financial history during the tulip bulb mania in 17th. century Holland. It was one of the most spectacular get rich quick binges in history. The first tulip…
FUTURES AND OPTIONS An interesting question to ask at this stage is, when would one use options instead of futures? Options are different from futures in several interesting senses. At a practical level, the option buyer faces an interesting situation.…
INTRODUCTION TO FUTURES AND OPTIONS In recent years, derivatives market have become increasingly important in the field of finance. While futures and options are now actively traded on many exchanges, forward contract s are popular on the OTC market. In…
USE OF FUTURES MARKET RY INDEX FUNDS Futures markets can be used for creating synthetic index funds. Synthetic index funds created using futures contracts have advantages of simplicity and low costs. The simplicity stems from the fact that index futures…
The S&P CNX Nifty is an market capitalisation index based upon solid economic research. It was designed not only as a barometer of market movement but also to be a foundation of the new world of financial products based on…
Most of the commonly followed stock market indexes are of the following two types: Market capitalization weighted index or price weighted index. In a market capitalization weighted index, each stock in the index affects the index value in proportion to the…
Derivatives have probably been around for as long as people have been trading with one another. Forward contracting dates back at least to the 12th century, and may well have been around before then. Merchants entered into contracts with one…
Inspite of the fear and criticism with which the derivatives markets are commonly looked at. these markets perform a number of economic functions. Princes in an organized derivatives market reflect the perfection of market participants about the future and lead…