NCFM NSE`s Certification in Financial Markets: Derivatives Market( Dealers) Module
- Mumbai National Stock Exhange 2012
- 118p
includes index and biblioraphy
INTRODUCTION TO DERIVATIVES Types of Derivative Contracts Forwards Contracts Futures Contracts Options Contracts Swaps History of Financial Derivatives Markets Participants in a Derivative Market Economic Function of The Derivative Market UNDERSTANDING INTEREST RATES AND STOCK INDICES Understanding Interest rates Understanding the Stock Index Economic Significance of Index Movements Index Construction Issues Desirable Attributes of an Index Impact cost Applications of Index Index derivatives FUTURES CONTRACTS, MECHANISM AND PRICING Forward Contracts Limitations of forward markets Introduction to Futures Distinction between Futures and Forwards Contracts Futures Terminology Trading Underlying vs. Trading Single Stock Futures Futures Payoffs Payoff for buyer of futures: Long futures Payoff for seller of futures: Short futures Pricing Futures Pricing equity index futures Pricing index futures given expected dividend amount Pricing index futures given expected dividend yield Pricing Stock Futures Pricing stock futures when no dividend expected Pricing stock futures when dividends are expected APPLICATION OF FUTURES CONTRACTS Understanding Beta (P Numerical illustration of Applications of Stock Futures Long security, sell futures Speculation: Bullish security, buy futures Speculation: Bearish security, sell futures Arbitrage: Overpriced futures: buy spot, sell futures Arbitrage: Underpriced futures: buy futures, sell spot Hedging using Stock Index futures By Selling Index Futures By Selling Stock Futures and Buying in Spot market OPTIONS CONTRACTS, MECHANISM AND APPLICATIONS Option Terminology Comparison between Futures and Options Options Payoffs Payoff profile of buyer of asset: Long asset Payoff profile for seller of asset: Short asset Payoff profile for buyer of call options: Long call Payoff profile for writer of call options: Short call Payoff profile for buyer of put options: Long put Payoff profile for writer of put options: Short put Application of Options Hedging: Have underlying buy puts Speculation: Bullish security, buy calls or sell puts Speculation: Bearish security, sell calls or buy puts Bull spreads - Buy a call and sell another Bear spreads - sell a call and buy another pricing of options contracts and greek letters Variables affecting Option Pricing The Black Scholes Merton Model for Option Pricing (BSD) The Greeks Delta (A Gamma (F) Theta (0) Vega (v) Rho (p TRADING OF DERIVATIVES CONTRACTS Futures and Options Trading System Entities in the trading system Basis of trading Corporate hierarchy Client Broker Relationship in Derivative Segment Order types and conditions The Trader Workstation The Market Watch Window Inquiry window Placing orders on the trading system Market spread/combination order entry Futures and Options Market Instruments Contract specifications for index futures Contract specification for index options Contract specifications for stock futures Contract specifications for stock options Criteria for Stocks and Index Eligibility for Trading Eligibility criteria of stocks Eligibility criteria of indices Eligibility criteria of stocks for derivatives trading on account of corporate ...... restructuring Charges CLEARING AND SETTLEMENT Clearing Entities Clearing Members Clearing Banks Clearing Mechanism Settlement Procedure Settlement of Futures Contracts Settlement of options contracts Risk Management NSCCL-SPAN Types of margins Margining System SPAN approach of computing