贵金属投资技术分析英文版 (26).pptVIP

Fi8000Basics ofOptions: Calls, Puts Milind Shrikhande Derivatives - Overview Derivative securities are financial contracts that derive their value from other securities. They are also called contingent claims because their payoffs are contingent of the prices of other securities. Derivatives - Overview Examples of underlying assets: Common stock and stock indexes Foreign exchange rate and interest rate Futures contracts Agricultural commodities and precious metals Examples of derivative securities: Options (Call, Put) Forward and Futures contracts Fixed income and foreign exchange instruments such as swaps Derivatives - Overview Trading venues: Exchanges – standardized contracts Over the Counter (OTC) – custom-tailored contracts They serve as investment vehicles for both: Hedgers (decrease the risk level of the portfolio) Speculators (increase the risk) Long Position in a Stock The payoff increases as the value (price) of the stock increases The increase is one-for-one: for each dollar increase in the price of the stock, the value of our position increases by one dollar Long Stock – a Payoff Diagram Short Position in a Stock The payoff decreases as the value (price) of the stock increases The decrease is one-for-one: for each dollar increase in the price of the stock, the value of our position increases by one dollar Note that the short position is a liability with a value equal to the price of the stock (mirror image of the long position) Short Stock – a Payoff Diagram Long vs. Short Positionin a Stock – Payoff Diagrams Long and Short Positions in the Risk-free Asset (Bond) The payoff is constant regardless of the changes in the stock price The payoff is positive for a lender (long bond) and negative for the borrower (short bond) Lending – a Payoff Diagram Borrowing – a Payoff Diagram Lending vs. BorrowingPayoff Diagrams A Call Option A European* call option gives the buyer of the option a right to purchase the underlying asset, at the contract