Option Trading Strategies and Their Effectiveness in the Indian Market The project starts with introduction to: * Overview of Derivatives and mainly Options. * The working and mechanics of options and how they help in hedging and trading. * History of Options with respect to Global & Indian Markets. * The advantages of Options The project mainly aims to cover the conceptual and theoretical background of the study including option terminology‚ option payoffs‚ payoff profiles
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the derivatives came onto the market. In the first part of this essay‚ I will introduce what are derivatives and explain under what conditions will they be used. In the second part of the essay‚ I am going to analysis the strong points and the weaknesses of using derivatives‚ both from the general aspect and detailed perspective. At the last part of my essay‚ I will connect the derivatives with the macro environment---the world financing environment and analysis to what extent did derivatives influence
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| FI475-Project Study | Six Derivatives Mishaps | 2012/5/8 | Sumitomo (future contracts) Background: 1996‚ Sumitomo Corporation was one of the top copper market makers in the world. During the over 10 years under Hamanaka‚ who was a genius charged on allegations that he could manipulate the price of the metal‚ Sumitomo lost at least $1.8 billion as a result of what it said were unauthorized trades‚ which then lost a third of its value on world markets in less than two months. The affair was
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DERIVATIVES FOR MANAGING FINANCIAL RISK Q-1 What are derivatives? Why do companies hedge risk using derivatives? A-1 A derivative is a financial instrument whose pay-offs is derived from some other asset which is called an underlying asset. Option‚ an example of a derivative security‚ is a more complicated derivative. There are a large number of simple derivatives like futures or forward contracts or swaps. Derivatives are tools to reduce a firm’s risk exposure. A firm can do away with unnecessary
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Project Report on Derivatives | Introduction to Futures & Options | Faculty: Dr. Sharif N. Ahkam 1.0INTRODUCTION In recent times the Derivative markets have gained importance in terms of their vital role in the economy. The purpose of this report to get an orientation to the derivatives and develop a basic understanding of what it is and how does it work. Derivatives are financial instruments‚ which derive their value from an underlying asset. The underlying
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Accounting for Derivative Instruments Page 1 of 22 Appendix 17A Accounting for Derivative Instruments Until the early 1970s‚ most financial managers worked in a cozy‚ if unthrilling‚ world. Since then‚ constant change caused by volatile markets‚ new technology‚ and deregulation has increased the risks to businesses. In response‚ the financial community developed products to manage these risks. These products—called derivative financial instruments or simply‚ derivatives—are useful for managing
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------------------------------------------------- Rice hulls Rice hulls (or rice husks) are the hard protecting coverings of grains of rice. In addition to protecting rice during the growing season‚ rice hulls can be put to use as building material‚ fertilizer‚ insulation material‚ or fuel. Production Rice hulls are the coating for the seeds‚ or grains‚ of the rice plant. To protect the seed during the growing season‚ the hull forms from hard materials‚ including opaline silica and lignin. The hull is mostly indigestible to
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Jane Dee Hull was born in Kansas City‚ Missouri‚ on August 8‚ 1935. Governor Hull is married to Dr. Terry Hull. Dr. Hull practiced medicine in Pheonix for 32 wears and now works as a consultant. Governor Hull and Dr. Hull have four children and eight grandchildren. Governor Hull received a bachelor’s degree in elementary education from the University of Kansas and also did postgraduate work in political science and economics at Arizona State University. She is a graduate of the Josephson Ethics Institute
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some of the tools required for hedging are futures‚ forwards‚ and swaps. With options‚ it is called as derivative instruments because one value of asset depends on the value of another asset. Futures contracts Futures were developed originally for agricultural commodities. For example‚ a farmer expects to have 100 tons of wheat to sell next September. If he is worried that the price may decline‚ he can hedge by selling 100 tons of September wheat futures at a price that is set today. Farmer has
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The short term risk-free rate usually used by derivatives traders is b. The LIBOR rate 3. Duration of a ten-year 6% coupon bond with a face value of $100 is a. Less than 10 years. 4. Which of the following are always positively related to the price of a European call option on a stock? c. The volatility 5. When we talked about Vega hedging‚ if a portfolio has 1000 shares of SPY and 10 contracts of at-the-money December 2013 put option on SPY (and nothing else in the portfolio)‚ is the
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