a deep insight about derivatives and the tools like futures and options..

8. What are the Importance of Derivatives

11. What do you mean by “HEDGING”?

14. What are different types of hedging?

16. PARTICIPANTS in the derivatives market

27. Spot exchange market

39. Quotations on Forward Markets

42. CURRENCY OPTIONS

45. Participants of futures contract

50. Trading Process

51. BUYER (TRADER) SELLER (TRADER) BROKER (MEMBER) BROKER (MEMBER) CLEARING HOUSE TRANSACTION PURCHASE ORDER SALES ORDER

57. OPTIONS

62. European Option American Option Bermudan Option In this the right can be exercised only on a fixed date in the contract; i.e. Option only exercisable on the expiry date. In this the right can be exercised on or before a fixed date in the contract, i.e. Option exercisable at any time until expiry date. This has pre-specified dates during its life till maturity, on which it can be exercised.

84. Strategy with call Option. Spot rate Gain (+)/Loss (-) for the buyer of call option $ 0.6000 - $ 0.02 $ 0.6200 -$0.02 $ 0.6400 - $ 0.02 $ 0.6500 - $ 0.02 $ 0.6600 - $ 0.02 $ 0.6700 -$0.02 $ 0.6800 -$0.02 $ 0.6900 -$0.01 $ 0.7000 $0.00 $0.7100 + $0.01 $0.7200 + $ 0.02 $ 0.7400 + $ 0.04 $ 0.7600 + $ 0.06

86. Strategy with put Option. S t Gain(+)/loss (-) 1.6050 +0.050 1.6150 +0.040 1.6250 +0.030 1.6350 +0.020 1.6450 +0.010 1.6500 +0.005 1.6550 +0.000 1.6600 -0.005 1.6650 -0.010 1.6750 -0.020 1.6850 -0.030 1.6950 -0.040 1.7050 -0.050 1.7150 -0.060 1.7250 -0.060 1.7350 -0.060

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