Derivatives Flashcards
What’s traded on ICE Europe?
crude oil, natural gas, power, coal, emissions and soft commodities.
What is Hedging?
A technique employed by portfolio managers to reduce the impact of adverse price movements on a portfolio’s value.
What is the CME and and what is traded on it?
Chicago Mercantile Exchange
US version of ICE Europe.
Agriculture, metals, FX
What does Long mean?-=
Long is the buyer of the future.
What does short mean?
Short is the seller of a derivative.
What does covered/naked mean?
Covered is when the seller has the futures that they’ve committed to sell
Naked is when the seller doesn’t have the assets.
What is a call / put option?
A Call option is the right to buy
A Put option is the right to sell.
Who are holders?
Who are Writers?
Holders are the buyers/owners of options
Writers are sellers of options.
What is the LME?
London metal exchange. Futures and options contracts are traded on a range of metals, including aluminium, copper, nickel, tin,
zinc and lead. More recently, it has also launched the world’s first futures contracts for plastics.
What is the name of the major UK market for trading in financial derivatives?
ICE futures Europe
What is a Holder also known as?
A buyer
What are the Writers also known as?
Sellers
Where a premium is taken, what is the name given to the person who ‘takes for the call’ or ‘takes for the put’?
Writer
The premium is the amount paid when purchasing which derivative?
An option
What are the main features of a financial future?
They trade on exchanges and have standardised terms
