MOST IMPORTANT MARKETS: (Contract Level)
- CBOE (CHICAGO OPTIONS EXCHANGE) CME (CHICAGO MERCANTILE EXCHANGE) CBOE (CHICAGO BOARD OF TRADE)
In Europe the Derivatives Market arrived in the following way in the eighties.
- Netherlands EOE (European Options Exchange) 1978 United Kingdom LIFFE (London International Financial Futures Exchange) 1978 France MATIF (Marché a Terme International de France) 1985 Switzerland SOFFEX (Swiss Financial Futures Exchange) 1988 Germany DTB (Deutsche Terminbourse) 1990 Italy MIF (Mercato Italiano Futures) 1993
Monetary Markets
They are financial operations for which the commitment to buy or sell is acquired at a future date.
They are contracts that allow market players to buy protection over price changes in assets.
DERIVATIVES MARKET ADVANTAGES
- Helps us meet our profitability targets Clearly reduces risk positions.
DERIVATIVES MARKET OPERATIONS
- OPCFFORWARD FUTURE CONTRACTS FINANCIAL EXCHANGES OR SWAPS OPTIONS
TERM OPERATIONS OF
OPCF COMPLIANCE
FINANCIAL
They are those financial operations that can be exercised to buy or sell assets in the future, such as currencies, securities, shares, “commodities” or financial futures on exchange rates, interest rates or stock indices.
FORWARD
They are personalized purchase and sale contracts in which one of the parties
agrees to sell a certain amount of a certain asset at a future date and the other party agrees to buy at the agreed price.
FUTURE CONTRACTS
Establishes the obligation to buy or sell a certain amount of an asset at a future date at a
determined price, assuming the parties the obligation to celebrate it and the commitment to pay or receive the losses or gains produced by the price differences of the contract
Options
It is the right but not the obligation to buy or sell an asset, called the underlying asset, at a future date and for
an agreed price
WHAT IS UNS OPCF ABOUT TRM?
OPCF EXAMPLE
An exporter sells 100 contracts of USD $ 5,000.oo for USD $ 500,000.oo for a term of 6 months, that is, for August 17, 2005. Basic Guarantee 10% * USD * TRM trading day, then 10% * 500,000 * 2330 = $ 105,930,000 in TES or pesos, deposited in the Colombian Stock Exchange.
Spot rate today Future rate
$ 2,328 $ 2,344
This operation can be closed at any time from its constitution up to 5 calendar days before the expiration date *
Trm today0 1 2 3 4 Trm1 = $ 2,280 5 6
$ 2,330 Trm2 = $ 2,408
If at expiration we have TRM1, it is very possible that the spot price is around this rate, suppose for this example $ 2285. In that case, Corredores Asociados will pay the difference between the agreed rate and the TRM1 ($ 64), that is, USD500,000 * 64 = $ 32,000,000. and the client will go to the Spot market to make the refund of their USD at $ 2285. In such a way that you will receive the weights from your sale plus the profit for the coverage.
On the other hand, if we have TRM2 and Spot $ 2400, the client will pay Corredores Asociados $ 32,000,000, but will have the benefit of going out to sell their USD at $ 2400.
EXAMPLE Cont.
If at any time (ex: Today 06-08-05) the exporter decides to Buy the 100 contracts, that is, the USD $ 500,000 for a term with a date equal to the expiration of the sale.
Spot rate today Future rate
1 = $ 2,200 $ 2,344
February 16 2 = $ 2,360 of 2005
0 1 2 06-08-20053 4 5
17-08-05
6 TF1 = $ 2,210
TF2 = $ 2,370
If on 06-08-05 the opposite operation is listed, that is, it buys 100 contracts for USD $ 5,000, and the market price is TF1, then Future rate - TF1 = $ 34 / USD, would be anticipating a profit of $ 17,000,000 that will be It will rotate until the expiration date of the contracts, that is, 08-17-05.
If, on the contrary, we find ourselves in a scenario with devaluation expectations, the healthiest thing would be to carry out the opposite operation in such a way as to close the losing position. Thus, if the market rate is TF2, then TF2 - Future Rate = $ 26 / USD, with which the client will lose $ 13,000,000 that must be paid on the day it is incurred and will be exposed again to exchange risk.
