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Table Of Contents

Trading Money
INTRODUCTION
TRADING MONEY
THE ROLES MONEY PLAYS
THE MAJOR CURRENCIES
SOME INTERESTING QUESTIONS
Markets, Prices, and Marketmaking
WHAT IS A “MARKET”?
WHAT IS A “PRICE”?
BUYERS AND SELLERS
MARKETMAKING
WHAT ARE “INTEREST RATES”?
DAY COUNT OR DAY BASIS
COMPOUNDING
DISCOUNTING
TYPES OF INTEREST RATES
INTEREST RATES IN THE REAL WORLD
Brief History of Foreign Exchange
HISTORICAL BACKGROUND
THE FX MARKETS TODAY
THE REGULATORY ENVIRONMENT AND CENTRAL BANK INTERVENTION
The Foreign Exchange Spot Market
THE SPOT MARKET
SPOT FX QUOTING CONVENTIONS
ECONOMIC INTERPRETATION
PURCHASING POWER PARITY
CROSS RATES AND TRIANGULAR ARBITRAGE IN THE SPOT MARKET
THE BID–ASK SPREAD IN FOREIGN EXCHANGE
TIMING
SETTLEMENT
MARKET JARGON
“THE BEST ARBITRAGE AROUND!”
Foreign Exchange Forwards
INTRODUCTION TO FORWARDS AND FORWARD PRICING
FOREIGN EXCHANGE FORWARDS AND FORWARD PRICING
INTEREST RATE PARITY (COVERED INTEREST ARBITRAGE)
FX SPOT–FORWARD ARBITRAGE
FX FORWARD PRICE QUOTES AND FORWARD POINTS
OFF-MARKET FORWARDS
FOREIGN EXCHANGE FORWARDS IN THE REAL WORLD
Foreign Exchange Futures
BACKGROUND
FUTURES VERSUS FORWARDS
FOREIGN EXCHANGE FUTURES CONTRACT SPECIFICATIONS
MARGIN
WHY USE FUTURES?
OPTIONS ON FX FUTURES
FX SPOT-FORWARD SWAPS
Foreign Exchange Options
OPTION BASICS
EQUITY OPTIONS
PUT-CALL PARITY WITH EQUITY OPTIONS
IN-THE-MONEY, AT-THE-MONEY, AND OUT-OF-THE-MONEY
FOREIGN EXCHANGE OPTIONS
PUT-CALL PARITY IN FOREIGN EXCHANGE
PERSPECTIVE MATTERS
FX OPTION PREMIUM
VOLATILITY
USES AND STRATEGIES
THE BINOMIAL MODEL
THE BLACK–SCHOLES/GARMAN–KOHLHAGEN MODEL
THE GARMAN–KOHLHAGEN OPTION RISK MEASURES OR “GREEKS”
Exotic Options and Structured Products
WHAT IS AN EXOTIC OPTION?
NONSTANDARD OPTIONS
DIGITAL OR BINARY OPTIONS
BARRIER OPTIONS
OTHER EXOTIC OPTIONS
FX-LINKED NOTES
The Economics of Exchange Rates and International Trade
MONEY VERSUS CURRENCY
TYPES OF FX EXPOSURES
FIXED VERSUS FLOATING EXCHANGE RATES
IMPLICATIONS OF MONETARY POLICY
TRADE DEFICITS: A CURSE OR A BLESSING
POLITICS AND ECONOMICS
Currency Crises
THE END OF BRETTON WOODS
BANKHAUS HERSTATT
THE ERM CRISIS OF 1992
THE ASIAN CRISIS OF 1997
THE RUSSIAN CRISIS OF 1998
THE TURKISH LIRA CRISIS OF 2001
THE ARGENTINEAN PESO CRISIS OF 2002
Technical Analysis
WHAT IS TECHNICAL ANALYSIS?
METHODS OF TECHNICAL ANALYSIS
TECHNICAL ANALYSIS IN FOREIGN EXCHANGE
TECHNICAL ANALYSIS TODAY
Where Do We Go from Here?
Conclusion
Precious Metals
Answers to the Chapter Exercises
Notes
References
About the Author
Index
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Foreig 0471732036

Foreig 0471732036

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Published by Quynh Tran

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Published by: Quynh Tran on Nov 25, 2012
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