Questions tagged [derivatives]

This tag is to be used for any question on deravites. It should typically be used in conjuction with the actual instrument being used like Options, Swaps, Futures

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Do banks need a foreign branch to access a derivatives market (e.g.) London

I would be very interested to know whether banks (e.g. Santander, Deutsche Bank, etc.) need a foreign branch in a country (e.g. UK - London) to access the derivatives market in this country. Would ...
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865 views

UK taxation for options and futures trading

I live in UK and I see that there are 2 taxes when trading: CGT to be paid on capital gain and is 18% or 28% depending if you are basic tax payer or not income tax on any interest or dividend ...
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119 views

Financial product with high variance, instead of lottery

When I was a kid, our family would once a year play the lottery. We kids talked with our parents about what we would do if we won the jackpot, and whenever we won something small like $100, we would ...
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47 views

What does it mean to find the Present Value of a FRA?

What does it mean when the present value of a forward rate agreement is calculated? Is this a price that the owner of the FRA can sell it for? Thanks for the help.
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34 views

Do the rewards of custom contract size in OTC derivatives justify the counterparty risk?

If I decide to trade OTC derivatives, I take on counterparty risk. Since the transaction is not overseen by a clearing house/firm, I accept the risk that the counterparty may not honour the obligation....
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38 views

Missing Open,High,Low,Close CME Crude Oil

I have been working on the crude oil futures data and have a couple of questions. There are contracts in which the open,high are empty but the low,close price is available. And in some cases none of ...
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29 views

Futures and premium

A stock will either go up to uS or down to dS next period. The risk-free rate is r. I'm using replicating portfolios to derive the premium on a futures contract with futures price F. What would the ...
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1answer
46 views

Forward contract hedge and market-maker

Referring to Mcdonald's "Derivatives markets" book, a market-maker or arbitrageur must be able to offset the risk of a forward contract. It is possible to do this by creating a synthetic forward ...
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18 views

Effects of Backwardation and Contango on Supply

As an example, if on June 1st, we observe that the term structure of oil prices is in backwardation up to the end of that year. After the New Year, the term structure of oil prices is in contango. ...
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40 views

Total return swaps for stock index

Apparently, inverse stock market ETFs (so-called bear ETFs) are constructed by taking positions in total return stock market index swaps, that is, the ETF forms a contract with an investment bank, who ...