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FINANCIAL MARKET COURSES

Forwards & Futures

Courses In This Course

The idea of a 'price in the future' is arguably the most fundamental concept in the evolution of derivatives. This course focuses on various aspects of both forward and futures contracts, including the pricing mechanism, the hedging process, and trading techniques. Forward-type contracts in the interest rate, equity, currency and commodity markets are all examined throughout the courses in this course.

Objectives

In this course, you will explore:

The calculation of a 'fair', but essentially unique, forward price for most investment assets

The distinctive features of the futures market

The hedging process for the different types of forward and futures contracts

Various trading opportunities using futures

Prerequisite Knowledge

An understanding of the ‘Introduction to Derivatives’ course is required.

Learner Profile

This course is designed for:

New or recent recruits to the futures desk

Dealers/traders

Portfolio managers

Treasury department staff

Sales and marketing executives

Finance and accounting staff

Compliance and regulatory staff

  •    FORWARDS & FUTURES - PRICING

    Overview

    At the heart of derivative pricing lies the concept of a forward price. Forward markets exist for nearly all financial, and many non-financial, assets. This course shows how a 'fair', but essentially unique, forward price can be calculated for most investment assets. It also examines how the assumptions differ when dealing with the forward prices of consumption assets rather than investment assets.

    Course Duration

    75 mins

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    Prerequisite Knowledge

    Forwards & Futures – An Introduction

  •    FUTURES MARKETS

    Overview

    The futures market is perhaps the most visible of derivatives markets, and although volumes stalled in many major markets in the 1990s, this has changed in more recent years. This course outlines the distinctive features of the futures market. It gives a snapshot of a rapidly evolving marketplace; products change, exchanges multiply and consolidate, and the very essence of trading is constantly in flux. A view of the current 'state of the game' is given, together with a more general description of the foundations of the futures industry.

    Course Duration

    75 mins

    Prerequisite Knowledge

    Forwards & Futures – Pricing

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  •    FORWARDS & FUTURES - HEDGING (PART I)

    Overview

    The elimination of future price risk lies at the heart of derivatives, whether in the form of forward trades or futures contracts. This course explains the basic principle behind hedging using 'prices in the future' and shows how this principle is applied across many markets. It also outlines the differences between, and relative attractions of, using either futures contracts or OTC forwards when hedging a position. The additional difficulties of hedging interest rate risk are covered in a subsequent course.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Future Markets

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  •    FORWARDS & FUTURES - HEDGING (PART II)

    Overview

    The use of futures hedging for both short and long-term interest rate risks is extremely widespread. Of the five most liquid exchange-traded contracts in the world, the most actively traded futures contract was the Eurodollar contract quoted on the CME.

     

    This course focuses on the hedging of interest rate risk, both for shorter-dated and longer-dated instruments. It examines the construction of hedges using bond and money market futures, and outlines some of the particular issues unique to these markets.

    Course Duration

    75 mins

    Prerequisite Knowledge

    Forwards & Futures – Hedging (Part I)

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  •    FORWARDS & FUTURES - TRADING

    Overview

    The practice of hedging is the foundation of futures and forward markets, but in this course we examine the various non-hedging trading strategies used by practitioners. Futures contracts have always been popular with traders who have no particular hedging interests. Close attention in this course is paid in particular to bond and money market futures trading strategies, such as bond basis trading, as these are probably the most widespread.

    Course Duration

    75 mins

    Prerequisite Knowledge

    Forwards & Futures – An Introduction

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  •    MONEY MARKET FUTURES

    Overview

    The money market is the market where the buying, selling, lending, and borrowing of short-term funds (one year or less) occur. Money market instruments include deposits, treasury bills and certificates of deposit (CDs).

     

    Money market futures contracts are one of the most convenient and useful instruments available to market participants looking to hedge an existing or future interest rate exposure. They benefit from high liquidity, easy price discovery, and very low credit risk. Apart from hedging, short-term interest rate futures can also be used for trading or speculative purposes and in building a yield curve.

     

    This course provides an overview of the major money market futures exchanges and contracts. The course also looks at how future contracts are used and focuses on how market participants use short-term interest futures for hedging.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Forwards & Futures – An Introduction

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