An Introduction to Derivatives

Course Title:      An Introduction to Derivatives Operations and Hedge Funds
Duration:             1 Day
Location:             Central London or Client office
PRICE:                 For tailored price CALL FREE 08000 828684


Forwards and futures   

• Trading and settlement
• OTC vs exchange-traded contracts
• Uses of both types

Valuing contracts

• What is the fair value for a contract?

        - Calculating the forward delivery settlement price
        - What is basis?
        - What affects the price of a contract? 
        - What is a tick?
        - Calculating the closing settlement price (EDSP)
        - Contango and Backwardation
 

Trading futures contracts

• The main derivative markets
• Electronic vs open-outcry trading
• Opening and closing out positions

Clearing

• Role of the clearing house

        - Role of clearing brokers

• Novation
• Margining positions

        - Initial margin, variation margin and maintenance margin

• Securitising derivatives positions

         - Cash buffers, using other collateral

Index futures

• Valuing index futures
• How do portfolio managers use index futures?
• Hedging, asset allocation, securitising cash
   

Options

• Puts and calls
• American vs European options
• Options vs futures

Swaps and CFDs

• What are CFDs?
• Using CFDs in portfolio management
• Worked example of a CFD

Regulations governing the use of derivatives by portfolio managers

• COLL Chapter 5 (UCITS III rules) for authorised funds
• Non-UCITS Retail (NURS rules)
• Qualified Investor Schemes rules
• Hedge funds

Accounting for derivatives in portfolios

• Valuing futures and forwards held in portfolios
• Associated economic exposure
• Cash/stock adjustment
• Gearing
• Impact on the balance sheet and P&L