Atharva school of business 2. Derivatives and risk management PROF. Currency derivatives-Futures and options 4. Foreign exchange spot trading is buying one currency with a different currency for immediate delivery. A foreign exchange forward is a contract between two counterparties to exchange one currency for another on any day after spot. The second currency is called as the terms currency.
The US Dollar is the base currency and the Rupee is the terms currency. If US Dollar—Rupee moved from Like the US Dollar, the Euro has a strong international presence and over the years has emerged as a premier currency, second only to the US Dollar. The Japanese Yen is the third most traded currency in the world. It has a much smaller international presence than the US Dollar or the Euro.
The Yen is very liquid around the world, practically around the clock. The currency is heavily traded against the Euro and the US Dollar. The Swiss Franc is the only currency of a major European country that belongs neither to the European Monetary Union nor to the G-7 countries.
Currency futures Mansi Kothari Long Position In Future Market Long Position In Future The trader has effectively analysed the market conditionsand has taken a right call by going long on futures and thus has made again of Rs. The trader has effectively analysed the marketconditions and has taken a right call by going short on futures andthus has made a gain of Rs.
SettlementFinal Settlement PriceFinal settlement date. Rules, regulations and byelaws of Exchange Purvi and Meghna Hedging position with negative correlation with underlying position If the relation between forward prices and futures prices differs, it gives rise to arbitrage opportunities. An active arbitrager realizes that there is an arbitrage opportunity as the one month futures price is more than the one month forward price. Clearing , settlementand risk management Nirav K.
Determinant of open position of a clearing member Currency Options Gaurav Chhabria Retail Market and Wholesale Market Option to sell foreign currency Rate in the currency market exists on exercise date. Can be exercised at any time between the writing date and expiration date. Can only be exercised at the expiration date and not before this date. Mostly popular in Switzerland and Germany.
Thumb rule- Traders who believe volatility will fall, will sell options and buy-back for a profit after volatility falls and cause option premium to fall. Changes in interest ratedifferentials. The option which has more option premium will be selected and then finally a final strike price will be selected.
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