What is an options on a futures? Explain the workings of this derivatives contract.
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What is an options on a futures? Explain the workings of this derivatives contract.
Question 3 (1 point) What is NOT a major type of derivatives Options Futures Hedge funds Swaps Question 4 (1 point) How large is the derivatives market in terms of notional outstanding? Pick the closest number $60 trillion O $600 billion O $600 trillion O $6,000 trillion
8) Please discuss the logic and process of derivatives such as futures, options, and swaps. How are the different in their structures?
Assume that we have the following derivatives portfolio: A long futures contract on stock A, with strike price 82 and a long put option contract on the same stock, with the same strike price. The option's premium is 8 and is payed today. The risk free rate of interest is 5%, and the time of expiration is 1 year. What will be the present value profit for the above derivatives portfolio if the stock's spot price is 109 at the...
Assume that we have the following derivatives portfolio: A long futures contract on stock A, with strike price 90 and a long put option contract on the same stock, with the same strike price. The option's premium is 6 and is payed today. The risk free rate of interest is 5%, and the time of expiration is 1 year. What will be the present value profit for the above derivatives portfolio if the stock's spot price is 116 at the...
What are the differences between Forward contract, Futures contracts, and Options contracts in reducing or eliminating foreign exchange risks? What are the advantages and disadvantages of each one?
The derivatives markets contain different types of contracts. Forward contracts, futures contracts, options, and swaps are some common types of derivatives contracts. True or False: One of the major differences between futures and forward contracts is that forward contracts are revalued and marked-to-market daily, whereas futures contracts are traded on an organized exchange. O False True Which of the following are used to hedge against fluctuating interest rates, stock prices, and exchange rates? Commodity futures Financial futures O Ahmad feels...
A U.S. corporation is considering using currency options and currency futures contracts. Explain to this corporation the advantages and disadvantages of each contract to hedge its exposure in Mexican pesos. Which derivative contract should the corporation use to hedge projects that are anticipated but not committed?
SPAN was developed in 1988 to compute risk margin for portfolios of futures and futures options. SPAN is still in use today. Explain how SPAN produces risk margin for futures and futures options portfolios.
2. What are the differences among a spot contract, a forward contract, and a futures contract? 4. What is the purpose of requiring a margin on a futures or option transaction? What is the difference between an initial margin and a maintenance margin? 8. What is an option? How does an option differ from a forward or futures contract? 13. What factors affect the value of an option? 15. What is a swap?
What is the delta of a short position in 600 European call options on silver futures? The options mature in 8 months and the silver futures contract matures in 9 months. The current 9 month futures price is $30.00 per ounce. The exercise price of the option is $31.00 per ounce. The risk-free interest rate is 5% per year and the volatility is 20 percent per year.