70 Questions and Answers: Futures and Options Markets
1. Futures and options markets
1.1. Introduction1. What is a futures and options market? 2. How do futures and options markets emerge? 3. What are OTC markets? (over the counter: non-institutionalized markets) 4. Which are the most important futures and options exchanges in the world?
1.2. Futures and options markets in Argentina5. How many futures and options markets are there in Argentina? 6. Who controls and regulates futures and options markets in Argentina? 7. What information about futures and options markets can be found in newspapers?
1.3. Participants8. Who are the participants in futures and options markets? 9. Who seeks to hedge positions in agricultural futures and options markets? 10. Why is the presence of speculators necessary in the market? 11. How are speculators participating in a market classified?
1.4. Related concepts12. What is the open interest? 13. How are prices related in spot and futures markets?
Forwards, futures, options and swaps.
1.5.1. Concepts and differences.14. What are the basic differences between a forward and a futures contract? 15. What are the differences between futures and options? 16. What is the advantage of operating with futures over forwards? 17. Why are futures and options, among others, called "derivatives instruments"? 18. Where are derivatives instruments traded? 19. What is a swap? 20. Which are the types of swap? 21. What is long? What is short?
22.214.171.124. Classification. Positions.22. How are options classified? 23. What is a call? What is a put? 24. What is holder? What is writer?
126.96.36.199. Options elements25. Which are the elements of options? 26. What is the premium of an option? 27. Which are the factors that influence options premiums? 28. What is the strike price or exercise price?
188.8.131.52. Exercise of an option. Intrinsic value.29. What do the terms "at the money", "out of the money" and "in the money" mean? 30. What is the intrinsic value of an option? 31. What is the time value of an option?
184.108.40.206. Valuation of options.
220.127.116.11.1. Valuation models.32. Which are the most famous models to value options? 33. Which are the most used models to value an option? 34. What are the necessary assumptions to use the Black&Scholes model? 35. Does risk-neutral valuation establish that investors are risk-neutral? 36. What implications does the risk-neutral valuation have for rate of return and future cash flows? 37. Taking into account an American call option on futures where the future and the option expire at the same time, when is the option on the future more expensive than the option on the underling asset? 38. How is annual historical volatility for option valuation obtained in case of day trading?
18.104.22.168.2. Concepts related to valuation.39. Which are the types of volatility? 40. What is the delta of an option? 41. What is the gamma of an option? 42. What is theta? 43. What is vega? 44. What is rho? 45. What is value at risk (VaR)?
1.6.1. Introduction.46. When was ROFEX created and for what purposes?
1.6.2. Trading in ROFEX.47. Which are the authorized underlying assets for the different types of futures contracts traded in ROFEX? 48. What are the necessary characteristics that a commodity must have to be traded in a futures market like ROFEX?
1.6.3. Agricultural ROFEX.
22.214.171.124. Characteristics of agricultural contracts.49. Which agricultural contracts are traded in ROFEX? 50. Which is the size of the agricultural contracts traded in ROFEX? 51. Within the Agricultural Derivatives Division, which is the difference between a May soybean contract and a May Rosafe Soybean Index (ISR) contract? 52. Which is the most traded agricultural contract in ROFEX? 53. Which are the trading months authorized for each agricultural contract traded in ROFEX? 54. Which are the settlement methods of agricultural futures contracts traded in ROFEX? 55. What is the settlement price and how is determined?
126.96.36.199. Hedging56. How is a buying hedge made? 57. How is a selling hedge performed?
1.6.4. Financial ROFEX.
188.8.131.52. Characteristics of financial contracts.58. Which financial contracts are traded in ROFEX? 59. Which is the most traded financial contract in ROFEX? 60. Which are the trading months authorized for each financial contract traded in ROFEX? 61. Which are the settlement methods of financial futures contracts traded in ROFEX?
1.7. Argentina Clearing62. How many clearinghouses are there in Argentina? 63. Which were the reasons for the creation of Argentina Clearing? 64. Why a trust? 65. What is a guarantee trust? Which are the trust's advantages? 66. What are clearing and safety nets systems? 67. Does Argentina Clearing perform any additional activity that is not related to the market's operations? 68. What is the difference between futures markets´clearinghouses and banks´clearinghouses? 69. Which are the advantages of being a clearinghouse member? 70. Which are then the services rendered by ROFEX and by Argentina Clearing?