Derivatives
Derivatives: Introduction to derivatives contracts:
1 / 1 the concept of derivative contracts:
Divided into securities traded in the money markets into two groups: papers or tools of basic financial Fundamental and securities or derivative financial instruments Derivatives The collection includes the first in what include bonds and shares in both its ordinary and outstanding, which represents the backbone of the capital markets present Spot markets in which the delivery of the papers which contained the deal and paid for within a few days, during which is to take the necessary action to transfer ownership. This, in addition to those markets that present any market and financial assets traded in, is a prerequisite for the existence of the second group of securities of any derivative contracts.
The derivative contracts primarily in futures and futures, and options contracts and swap contracts. As indicated by its name, the existence of those contracts, as well as market value is derived, or depend entirely on the market value of another asset trading market in the present. Price of a futures contract for the purchase of wheat depends on the price of wheat on the market today, which is trading in it. And the value of the option contract to buy a stock, depends on the market value of the shares in the stock market. We have witnessed the 1973 revolution in derivatives contracts, as introduced for the first time derivative contracts on financial assets. Prior to that date was the derivatives contracts is limited to futures and futures on agricultural commodities and natural resources such as gold and silver, in addition to the options contracts on stocks that were available then, and traded in the market is orderly, but now Vttdaol options contracts in regulated markets, and there was a picture many of them.
Second: Contracts choice OPTIONS:
2 / 1 Introduction:
Represent contracts check one investment tools of modern, which give the investor an opportunity to reduce the risks for, and in particular the risk that prices of securities owned by or to be bought or sold in the future, called the contract "the rights or contracts chosen" because it gives buyers contract the right (not obligation) to perform the contract or failure to perform, usually a certain amount is non-refundable pay the second party (editor of the contract) by way of compensation or reward, and human choice can be divided as follows:
Types of the right to choose
Classification on the basis of the implementation date of the agreement (contract) classification based on the type of transaction classification on the basis of ownership of securities
Check the European choice
Choose a selection of U.S. Buy Sell or mixed double check check box is not covered covered
And know the right choice that agreement be given to a party the right to sell or purchase a number of securities (and perhaps currencies or commodities or indicators ... etc.) to the party's second at a specified price agreed in advance, that the execution at any time during the period that elapsed between the the date of concluding the contract and the date of completion or implementation in the specified date of expiry of contract, and the following will clarify the types of contracts in the previous selection owner.
The right to choose EU European Option
Is the right choice (to buy or sell or both) is that this right has been exercised or carried out in the deadline of the end of the decade.
The right to choose the U.S. American Option
Is the right choice (to buy or sell or both) is that this is the right to exercise or enforce at any time during the period that elapsed between the conclusion of the contract and its expiry date.
The right to choose Buy Call Option
This allows the investor the right (the buyer the right to choose) the purchase of a number of securities at a specified price in the history of a particular peer reward paid by the buyer to the editor of the right to choose.
The right to choose Sell Put Option
This allows the investor the right (the buyer the right box) sale of a number of securities at a specified price in the history of a particular peer reward paid by the buyer to the editor of the right to choose.
Check covered Covered Option
Is the right choice to buy or sell or both where the contract owner is already editor of the securities, which are contracted.
Box is not covered Uncovered Option
Is the right choice to buy or sell or both where the investor does not already an owner of securities that are contracted.
2 / 2 pillars holding the right choice:
1 - Buy the right Buyer
Is a person who is buying the right to choose whether it is the right choice, is the right choice to buy or sell and have that person right in the performance or non-implementation of the agreement to pay remuneration paid by the second party is the editor of the right to choose.
2 - right Editor: Writer
Is a person who is editing the right for the investor (or buyer the right) peer reward obtained from the right buyer.
3 - Implementation rate: Exercise or Striking Price
Is the price of the securities at the conclusion of the contract and is usually the current price of securities in the market.
4 - Market Price: Market Price
Is the price of the securities on the expiration date or the exercise of the Agreement Price at Expiration date.
5 - Effective Date: Exercise Date
Is the date of the agreement which is usually the first day of entry into force of the Agreement.
6 - End Date: Expiration Date
Is the date on which the buyer the right to practice or implementation of the right 0 and this date is the last day agreed in the case of the European choice, or any day falls between the date of conclusion of the contract and the date of expiry of the contract in accordance with the selection of the U.S..
7 - Premium Bonus
Is the amount agreed upon by the buyer the right to choose to pay the right editor to be a peer to the buyers the right choice in the implementation or non-implementation of the agreement.
Having reviewed the characteristics of the right to choose will offer two basic types of human choice, and are buying the right to choose, the right to choose the sale.
2 / 3 the right to choose Sell
Provides the right to choose Sell Put Option opportunity for the investor to protect its investments from risks of low market value, as it allows this type of investor requiring the second party in a selection of sale (the editor of the right) the implementation of the Agreement if the prices of securities (subject agreement during the term of the contract) for a price Implementation Exercise or Striking, which ensures the investor (called the buyer the right Buyer) be able to sell securities to the editor in the same execution price regardless of how much you have suffered declines in stock prices and in return reward paid by the buyer was entitled to the editor of the right. This bonus is not refundable under any circumstances, and in fact, accounts of compensation to the editor about the right amount of risk faced by them, and then the losses if the prices of securities on the rate of implementation in the future
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