To hedge the market, you can use futures and options
novice traders
often think, what is needed are
financial instruments such as futures
Options. Can I use them to insure
its position on the financial markets? AND
how do use them as
a full-fledged tool for investment?
The first time derivatives
financial instruments used
suppliers and buyers of various
products to protect against sharp
changes in the market. For example, a large
grain buyer was afraid that the next
year grain prices may rise sharply
due to the recurrence of the dry season.
To yourself somehow protect from the growth
prices, he concluded a contract with the supplier,
where he promised to sell some
the amount of grain laid down in the agreement
price. There were solved two problems: the buyer
I insure themselves against rising prices and the supplier
received assurance that his crop will
implemented. This form of contract
It formed the basis of forward and futures
contracts, which are now very active
used on the stock exchanges.
So, futures - this
a financial instrument at its base
an obligation to execute the transaction
the sale of some assets by advance
specified price and within a
term. Futures are deliverable
(Classical - there need to be discussed
Delivery and date of a certain product)
and calculated that only happens
allocation of funds between the parties.
It should be noted that at the conclusion of
the contract is paid a small portion of
from future calculations - it acts
how to guarantee implementation intentions.
Then this item in the exchange language became
be called "collateral".
For example, to
insure your diversified
portfolio in the Russian market,
you can buy futures on the
Rs. This futures - settlement, that is,
on the market do not have the underlying asset, which
It could be traded. In fact, in
All transactions with the futures
an investor buys or sells a whole
Russian market. Shares of major Russian
Companies that are included in your portfolio,
They will be insured by these futures.
During the implementation of
such investor undertakes futures
"sell" RTS index at the current
price if the index to
set date (called "date
Expiry ") will be lower than the previously-agreed
values. In fact, the investor will receive
profit, because it can sell
futures at prices above market. so he
It will be able to partially compensate
Loss from the loss of value of the portfolio
shares.
After most futures
common steel options. AT
Unlike futures, options are
two types of option to buy (call) and
the option to sell (put).
Option - it is only right
to buy or sell the underlying asset,
but not the obligation. But at the same time
there is a fundamental difference between
buyers and sellers of options.
When selling options there is an obligation
to sell or buy a commodity at a set
price, in the event that the buyer
decides to make use of this option
opportunity. And then to the buyer
may choose to exercise the option or
no. The sale of an option paid
premium, which is irrevocable
and not taken into account in a subsequent transaction.
options used
investors to hedge their
position. Suppose one oil producer
the company wants to sell oil at current
prices, but is concerned that in the near
the future can not find a buyer. Then
she pays the buyer of oil
a premium and acquires
an option under which the contractor takes
the right to buy a certain
Product volume at a set price in
the event that an option holder
submit it for execution. It turns out,
If oil prices rise, the company
be able to sell them at a profit on the market, and
if the price falls below the set in
option, the option to present a company
for execution.
Unfortunately, options and
Futures are often used by speculators,
because they allow for short term
earn a huge income or
lose a significant amount of money.
Active use them due to the
in that at the conclusion of such agreements
It paid only a small
part (guarantee provision of the premium)
the price of the underlying asset. When it changes
value of the underlying asset at a 2-5% revenue
or loss from futures transactions may
reach 10-40%.
If you combine different
derivatives, it allows
receive a high level of income with
minimal investment. That is, when
using options or futures
together with the underlying assets
(Stocks, commodities), investors can achieve
reduce the risks due to minor
increase investment spending.
However, if these instruments are used
without reference to the underlying assets, and
may increase risks.
You are cautioned that
Many novice investors are attracted
an opportunity to get a colossal
income, without using a large
funds. A control their
"aggressive" investment options
they forget - and often an investor
without professional help quickly
lose all their money.
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