Professional Documents
Culture Documents
Introduction
to Derivatives
What Is a Derivative?
• Definition
An agreement between two parties which has a value
determined by the price of something else
• Types
Options, futures and swaps
• Uses
Risk management
Speculation
Reduce transaction costs
Regulatory arbitrage
• Oil prices:
1951–1999
• DM/$ rate:
1951–1999
• Exchange-traded derivatives
• Viewpoint of Market
Maker
• Why short-sell?
Speculation
Financing
Hedging