Chapter 2 : Mechanics of Futures Markets

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Chapter 2 : Mechanics of Futures Markets

Post by Admin on Fri Jul 08, 2016 4:01 pm

1) Corn contract started trading in futures in US.
2) Story : cattle contracts in US.
3) Specification of future contract :
- The Asset :  quality of asset
- The contract size :
- Delivery Arrangements
4) Convergence of futures price to spot price  
5) The operation of margins
- margin account
- maintenance margin
- margin call - when margin is less than maintenance margin then margin call gets triggered
- variation margin
6) Initial margin requirement can be satisfied with treasury bills (90% of their face ) and shares (50% of market value).
7) maintenance margin is 75% of initial margin.
Cool spread transaction ???
9) The Clearing House and Clearing Margins
10) Investor -> margin accnt with broker -> broker accnt with clearing house member ->  clearing house member accnt with clearing house
11) Gross margin and net margin
12) Credit risk
13) OTC market
14) Collateralization
15) Systematic risk
16) Subprime mortgage
17) Market Quotes
18) Normal markets, inverted markets
19) Delivery : first notice day, last notice day, last trading day.
20) Types of tradere :
- Future Comission merchants
- locals
- Speculators : Scalpers, Day traders, Position traders
21) Regulations
CFTC
SEC
NFA
22) front running
23) Story - Hunt brothers
24) Accounting and tax

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