Introduction to Futures and Forwards

Introduction to Futures and Forwards

Abdulla Javeri

30 years: Financial markets trader

Futures and forwards are both derivatives, and a derivative is a financial product, instrument or contract whose value or price is derived from the price of something else. In the first video, Abdulla provides an overview of both contracts, their main characteristics and differences.

Futures and forwards are both derivatives, and a derivative is a financial product, instrument or contract whose value or price is derived from the price of something else. In the first video, Abdulla provides an overview of both contracts, their main characteristics and differences.

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Introduction to Futures and Forwards

5 mins 38 secs

Overview

Futures and forwards are both derivative instruments and a derivative. Both contracts are legal undertakings to take delivery (buy) or to deliver (sell) the underlying asset on an agreed date in the future. The contract price is agreed and fixed at the start of the contract. – Agree a price ‘upfront’ for delivery and settlement on the agreed date.

Key learning objectives:

  • What is a derivative?

  • What is a forward and futures trade?

  • Identify the principal difference between a forward trade and a futures trade

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Summary
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Expert
Abdulla Javeri

Abdulla Javeri

Abdulla’s career in the financial markets started in 1990 when he entered the trading floor of the London International Financial Futures Exchange, LIFFE, and qualified as a pit trader in equity and equity index options. In 1996, Abdulla became a trainer for regulatory qualifications and then for non-exam courses, primarily covering all major financial products.

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