Mechanics of Future Markets by Edu Pristine

Author of lecture Mechanics of Future Markets

Edu Pristine

Customer reviews

Excerpts from the accompanying material

... -Contract size: The amount of the asset to be delivered. -Delivery arrangement: place of delivery. -Delivery month Margins. -Margin account.: investor deposits a certain amount of money with the broker in the margin account. -Initial margin: the initial amount deposited in the margin account. -Maintenance margin: Is somewhat below the initial margin. ...

... initial margin requirement were 60%.and the maintenance margin requirement is 25%. ...

... Initial Margin = 60% x 50,000 = 30,000
Maintenance margin = 25% x 50,000 = 12,500. The investor gets a ...

... variation margin if the stock price ...

... down to $10, the loss = 1000 x (50 – 10) = 40,000 ...

... Example: A stock is trading at $40, an investor places a stop limit order with stop price $42 and limit price $42.80. As the stock crosses $42 the limit order is activated. Market-if-touched order: It is similar to stop order but the buy and sell happens the opposite way. In case of MIT buy order, the market order is activated when a lower level price is met. While in stop order the market order is activated when a higher level price is met. Discretionary order: A market order whose execution may ...

... It is one trading day older than the prices’ day 1. ...

... currency risk by taking a short position in a currency forward at a particular price Speculators. Use derivatives to bet on a particular direction of movement of the asset price. If a speculator believes that the SR of a foreign currency will be higher in 3 months than its present 3 month forward rate, he goes long on the forward. After 3 months ...

... The minimum amount after which a margin call is sent to the investor. After margin call investor has to top his margin account to the initial margin Clearing House Margin. If not the broker a clearing house member has to be a member of the clearing house. Clearing margin: Just like a margin account ...

... decided by the exchange, but the exact date of delivery is specified by the short contract holder Notification to deliver is given by the broker to the clearing house. The number of contracts and the specifics of the delivery ( what grade, ...

... Example: A stock is trading a t $40, an investor places a stop limit order with stop price $42 and limit price $42.80. As the stock cross es $42 the limit order is activated Market-if-touched order: It is similar to stop order but the buy and sell happens the opposite way. In case of MIT buy order, the market order is activated when a lower level price is met. While in stop order the market order is activated when a higher level price is met. Discretionary order: A market order whose execution may be ...