Description

Futures contracts have long been used by the agriculture industry to eliminate the price risks associated with farming produce. This elimination of price risks, known as hedging, has become a common practice in today’s markets. Trading in futures has moved beyond its agricultural origins and is now a modus operandi for numerous trading parties whose incentives are to either decrease the risk factor by hedging, or to make a profit through speculation. Futures contracts form a significant trading sector in the global financial system. They now trade on various commodities, including energy, single stocks and stock indices, interest rates and currencies, and some more exotic benchmarks such as the climate.
This course examines the fundamentals of futures contracts, including their pricing and quotation, and how they are used by hedgers as a protection against adverse price risks and by speculators as a means to increase profit through calculated risk. The course looks at commodity, equity, and currency futures.