By John C. Hull
Directed basically towards undergraduate finance scholars, this article additionally presents functional content material to present and aspiring execs.
Based on Hull's Options, Futures and different Derivatives, Fundamentals of Futures and strategies Markets presents an obtainable review of the subject with out using calculus. jam-packed with numerical examples and bills of real-life events, this article successfully publications readers throughout the fabric whereas assisting them organize for the operating global.
NOTE: this can be the standalone e-book, if you'd like the Book/Solutions handbook and research consultant order the ISBN below:
0133418804 / 9780133418804 of Futures and strategies Markets & Student's recommendations handbook and research advisor package deal
Package includes:
0132993341 / 9780132993340 basics of Futures and strategies Markets
013299514X / 9780132995146 Student's strategies guide and examine consultant for basics of Futures and ideas Markets
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Additional info for Fundamentals of futures and options markets
Sample text
Investor instructs a broker to sell one July put option contract on a stock. The stock price is $42 and the strike price is $40. The option price is $3. Explain what the investor has agreed to. Under what circumstances will the trade prove to be profitable? What are the risks? 31. S. company knows it will have to pay 3 million euros in three months. 4500 dollars per euro. Discuss how forward and options contracts can be used by the company to hedge its exposure. 32. A stock price is $29. 50. 50, respectively.
On the other hand, if the contract size is too small, trading may be expensive as there is a cost associated with each contract traded. The correct size for a contract clearly depends on the likely user. Whereas the value of what is delivered under a futures contract on an agricultural product might be $10,000 to $20,000, it is much higher for some financial futures. For example, under the Mechanics of Futures Markets 43 Treasury bond futures contract traded by the CME Group, instruments with a face value of $100,000 are delivered.
20 call option contracts). Suppose that the speculator’s hunch is correct and the price of the stock rises to $27 by December. The first alternative of buying the stock yields a profit of 100 Â ð$27 À $20Þ ¼ $700 However, the second alternative is far more profitable. 50. The total payoff from the 2,000 options that are purchased under the second alternative is 2,000 Â $4:50 ¼ $9,000 Subtracting the original cost of the options yields a net profit of $9,000 À $2; 000 ¼ $7,000 The options strategy is, therefore, ten times more profitable than the strategy of buying the stock.