Académique Documents
Professionnel Documents
Culture Documents
Concept of Derivatives
Derivatives products
- Basics
- Contract Specifications
- Types of Market Participants
Risk Management in Derivatives
Eligibility criteria in Derivatives
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Forwards
Futures
Options
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A Forward Contract is an agreement to buy
or sell an asset at a pre-determined future
time for a pre-determined price
The contract is negotiated privately usually
between two parties
The parties to the contract assumes
counter party risk
The contracts are not standardized
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Take a short position
When Reliance Future is at
Sell Reliance Futures
Market falls and Reliance Futures goes to
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Buy Reliance Futures
Profit = Rs2-
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American Option
can be exercised any time on or before
the expiration date
European Option
can be exercised only on the expiration
date
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SENSEX Futures
SENSEX Options
Stock Futures on 1 individual stocks
Stock Options on 1 individual stocks
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Hedgers
Speculators
Arbitrageurs
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Initial Margin
It is to be collected upfront
Calculated on a portfolio basis
At client level
On trade executed basis
Collateral Adjusted on a real time basis
Based on VAR
Calculated using SPAN
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FII limits
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