《management企业管理类英文版PPT课件7.pptVIP

Investments: Analysis and Behavior Chapter 19- Futures Markets Learning Objectives Understand futures contract characteristics Know how and where futures contracts trade Be able to compute profits and losses on futures positions Utilize futures contracts for hedging purposes Learn the dynamics of futures pricing Futures Market Chicago Board of Trade ( CBOT): the first and largest commodities exchange Forward contract: an agreement between two parties to buy or sell a commodity at a specific future time for an agreed upon price. Popular among producers, processors, and merchant Counterparty risk (producers unable or unwilling to deliver or buyers vanish) To remedy the situation, CBOT developed a standardized agreement Futures contract Futures Contract Futures contract: standardized agreement between two parties committing one to buy and the other to sell at a set price on or before a given date in the future Margin: performance bonds or good-faith deposits to insure contract performance Initial Margin: Minimum amount required to initiate a trade Maintenance margin: Minimum amount required at all times to sustain a market position Margin call: when margin level is lower than maintenance margin Mark-to-market Daily settlement of gains and losses between buyers and sellers. If spot price rises, sellers pay buyers in cash for the change in price If spot prices falls, buyers owe sellers If a futures trader losses too much, more money will need t be put in the margin account. Futures characteristics Seven major underlying asset groups Delivery physical delivery (only 1% to 2%) cash settlement Long position: buyer of a future contract Short position: seller of a future contract Trading open-outcry: by voice and hand signals Electronically: by network Floor broker and dual trader execute customer orders Can be terminated by an offsetting transaction Contractual Provisions Underlying asset: Commodity, currency, financial instrument inde