30 years: Risk management & derivatives trading
“Derivatives” is a catch all term for a wide range financial products. In this series, Lindsey will cover what forwards and futures are and how to price a forward trade.
“Derivatives” is a catch all term for a wide range financial products. In this series, Lindsey will cover what forwards and futures are and how to price a forward trade.
10 mins 53 secs
Derivatives is a catch all term for a wide range of financial products, including futures and options, interest rate swaps, oil options, FX forwards, equity swaps and credit default swaps. Forwards contracts can be used in circumstances where prices are uncertain, and thus traders lock in and hedge their risk. The calculation of the fair forward price is outlined below.
Key learning objectives:
Define forwards and futures contracts
Learn the formula for calculating the fair forward price
Identify what the price of a 3 month forward NOT involve
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