This course focuses on the institutional structure and economic functions of futures and options markets. Price formation in both commodity (e.g., corn, crude oil, cotton, and cattle) and financial (e.g., Eurodollar, Treasury Bonds, and stock indexes) futures and options markets will be examined in detail. The theory and practice of hedging will be explored in depth. Additional topics include: the theory of inter-temporal price formation for commodities and financials, common approaches used to forecast prices, statistical analysis of historical price behavior, and futures and options market regulation.
All content for Futures and Options is the property of Collin Carter and is served directly from their servers
with no modification, redirects, or rehosting. The podcast is not affiliated with or endorsed by Podjoint in any way.
This course focuses on the institutional structure and economic functions of futures and options markets. Price formation in both commodity (e.g., corn, crude oil, cotton, and cattle) and financial (e.g., Eurodollar, Treasury Bonds, and stock indexes) futures and options markets will be examined in detail. The theory and practice of hedging will be explored in depth. Additional topics include: the theory of inter-temporal price formation for commodities and financials, common approaches used to forecast prices, statistical analysis of historical price behavior, and futures and options market regulation.
Lecture 18 covers hedging using options and compares the benefits of
hedging using options versus hedging using futures. Examples of hedging
using options are presented.
Lecture 17 introduces the concept of put-call parity and its
implications for options pricing. Arbitrage relationships between
options contracts are discussed.
Lecture 16 Options on futures are introduced and options terms such as put, call,
strike price, premium, and intrinsic value and time value are defined.
Numerous examples of options trades are presented.
Lecture 15: Carter continues the discussion of hedging, giving examples
of currency and financial hedges. The concept of an optimal hedge is
discussed.
Lecture 14: Carter introduces hedging with futures as a risk management
strategy. He gives examples of long and short hedges in commodity
markets are presented. Basis is defined as the difference between
futures and cash prices and the implications of basis risk are
discussed. Hedging is categorized as arbitrage, operational, or
anticipatory.
Lecture 13 introduces two basic techniques for futures price
forecasting: fundamental analysis and technical analysis. Carter gives
examples of fundamental analysis, such as purchasing-power parity in
currency markets are presented.
Lecture 12 begins with a description of Eurodollar futures contracts
including calculation of profit or loss on and example contract.
Professor Carter further discusses trade imbalance, politics, and
international currency markets and valuation. He describes interest rate
differentials and parity using the difference in U.S. and Canadian
dollar values and interest rates. Interest rates, bonds and the cost of
carry market.
Lecture 11 outlines the three types of financial futures and how they
are priced. Professor Carter describes the characteristics of different
debt instruments, bonds and eurodollars. The role of interest rates in
debt instrument markets. He answers why financial futures have become
so popular and how to read yield curves.
Lecture 10 presents the Theory of
Normal Backwardation (Keynes) and the Theory of Price of Storage
(Working) - explain how the prices for different delivery months are
related and, in turn, the relationship to the spot price.
Lecture 9 completes the discussion of the price of storage and provides
an example of actual basis for Illinois corn. Carter introduces
foreign currency markets, how economic indicators impact currencies and
interest rates. He talks about which economic variables affect currency
prices.
Lecture 8 Describes the operation of the clearinghouse. Prof. Carter uses the trade of a 100 oz. gold contract to explain the role and function of the clearinghouse in the market as an example.
Trading equity indices an introduction. Professor Carter discusses
commodity price relationships, explaining inter-temporal commodity
pricing relationships - soybeans and wheat are used as examples. The
importance of storage and how storage affects markets, and accounting
for the costs of storage.
Lecture 6 gives examples of treasury-bond trading, pricing, profit-loss
calculation, basis points, interest-rate expectation, and of currency
trading are discussed. These are followed by video showing trading
action on the floor of the NY Mercantile Exchange and the Chicago Board
of Trade.
Lecture 5 presents the economic functions served by futures and options
markets. It then begins a description of the terminology and mechanics
involved in futures and options markets and provides a general
organization of a typical futures market and the role of regulators and
governmental oversight.
This class covers the use of Stock-Trak website. Describes the origins of futures
and how the development of futures options reduced the seasonal price
swings of agricultural commodities and encouraged the storage of grain.
Answers how to read futures contract price quote tables, what is the
opening price, settlement price, lifetime high and low prices?
This class describes what options contracts, or options on futures
contracts are. It also answers what the difference is between a call
option and a put option. What does it mean to go long or go short?
Professor Carter describes the top U.S. exchanges, when they were
founded and the primary trading instruments on each. Next, he describes
similar international futures markets. Old-fashioned pit trading vs.
electronic trading methods are described. Carter discusses the
importance of futures markets on the world economy.
Lecture 2 continues the course introduction - explaining just what is a futures
contract and what are the four categories of futures contract. This
lecture also provides an introduction to an options contract.
This course focuses on the institutional structure and economic functions of futures and options markets. Price formation in both commodity (e.g., corn, crude oil, cotton, and cattle) and financial (e.g., Eurodollar, Treasury Bonds, and stock indexes) futures and options markets will be examined in detail. The theory and practice of hedging will be explored in depth. Additional topics include: the theory of inter-temporal price formation for commodities and financials, common approaches used to forecast prices, statistical analysis of historical price behavior, and futures and options market regulation.
