Futures and Options EN Production Futures and Options Collin Carter 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. 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. Charlie Turner cjturner@ucdavis.edu Futures and Options ARE139: Lecture 1, Fall 2015 http://itunes.ucdavis.edu0_2oncxzjp http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_2oncxzjp/flavorId/0_lac3wylt/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Thu, 24 Sep 2015 12:08:08 -0400 Lecture 1 starts with a broad outline of the course. Carter discusses the history and basic principles of futures markets. elldub Lecture 1 starts with a broad outline of the course. Carter discusses the history and basic principles of futures markets. Lecture 1 starts with a broad outline of the course. Carter discusses the history and basic principles of futures markets. 1:22:00 futures, options, hedging, pricing, policy tools, economics, financials, commodities, markets, trading, banking, speculation, bonds, prices ARE139: Lecture 2, Fall 2015 http://itunes.ucdavis.edu0_wdjs6oq1 http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_wdjs6oq1/flavorId/0_hyhmbk7p/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Tue, 29 Sep 2015 12:00:11 -0400 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. <br> elldub 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. <br> 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. <br> 1:22:23 futures, options, pricing, policy tools, market, stock, economic commodities, currencies, uc davis, colin carter, stock-trak ARE139: Lecture 3, Fall 2015 http://itunes.ucdavis.edu0_1brfms78 http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_1brfms78/flavorId/0_j5em6w0v/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Thu, 01 Oct 2015 12:02:07 -0400 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.<br> elldub 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.<br> 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.<br> 1:24:28 futures, options, hedging, pricing, policy tools, financial trading, exchanges, financial markets, uc davis, colin carter ARE139: Lecture 4, Fall 2015 http://itunes.ucdavis.edu0_ndrhjcje http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_ndrhjcje/flavorId/0_qzz71jhu/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Tue, 06 Oct 2015 12:01:08 -0400 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? <br> elldub 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? <br> 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? <br> 1:22:56 futures, options, pricing, policy tools, exchanges, financial trading, economic commodities ARE139: Lecture 5, Fall 2015 http://itunes.ucdavis.edu0_g4i8avxt http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_g4i8avxt/flavorId/0_659yswkf/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Thu, 08 Oct 2015 12:04:08 -0400 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.<br> elldub 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.<br> 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.<br> 1:26:34 futures, options, uc davis, colin carter, exchanges, financial trading, regulation, government oversight ARE139: Lecture 6, Fall 2015 http://itunes.ucdavis.edu0_q2g2iuiz http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_q2g2iuiz/flavorId/0_8rvctgq9/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Tue, 13 Oct 2015 12:01:07 -0400 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.<br> elldub 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.<br> 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.<br> 1:23:56 futures, options, pricing, policy tools, exchanges, financial trading, financial markets, colin carter ARE139: Lecture 7, Fall 2015 http://itunes.ucdavis.edu0_1avvp3qx http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_1avvp3qx/flavorId/0_hqi2uau8/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Thu, 15 Oct 2015 12:01:09 -0400 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.<br> elldub 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.<br> 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.<br> 1:23:16 futures, pricing, commodity, uc davis, economics ARE139: Lecture 8, Fall 2015 http://itunes.ucdavis.edu0_p7to6kgt http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_p7to6kgt/flavorId/0_m4ljapd7/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Tue, 20 Oct 2015 12:07:34 -0400 Lecture 8 Describes the operation of the clearinghouse.&nbsp; 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.<br> elldub Lecture 8 Describes the operation of the clearinghouse.&nbsp; 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.<br> Lecture 8 Describes the operation of the clearinghouse.&nbsp; 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.<br> 1:25:21 futures, options, pricing, economic commodities, indices, contracts, gold ARE139: Lecture 9, Fall 2015 http://itunes.ucdavis.edu0_mc0bsi4r http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_mc0bsi4r/flavorId/0_6hku828w/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Thu, 22 Oct 2015 11:51:28 -0400 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.<br> elldub 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.<br> 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.<br> 1:14:38 futures, pricing, uc davis, colin carter, currencies ARE139: Lecture 10, Fall 2015 http://itunes.ucdavis.edu0_rff4urqf http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_rff4urqf/flavorId/0_ghtmebb2/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Tue, 27 Oct 2015 12:00:23 -0400 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.<br> elldub 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.<br> 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.<br> 1:22:47 futures, financial markets, colin carter, uc davis, debt, bonds, eurodollars, instruments, basis ARE139: Lecture 11, Fall 2015 http://itunes.ucdavis.edu0_3yqmns9e http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_3yqmns9e/flavorId/0_ue3ce9wy/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Tue, 03 Nov 2015 12:00:13 -0500 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. <br> elldub 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. <br> 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. <br> 1:22:17 futures, financial markets, bonds, pricing, eurodollars, colin carter, uc davis, financial, debt ARE139: Lecture 12, Fall 2015 http://itunes.ucdavis.edu0_3g3quaun http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_3g3quaun/flavorId/0_zbtshkj6/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Thu, 05 Nov 2015 11:34:07 -0500 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. <br> elldub 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. <br> 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. <br> 59:09 futures, colin carter, uc davis, financial markets, eurodollars, currency, international nutrition, parity, bonds ARE139: Lecture 13, Fall 2015 http://itunes.ucdavis.edu0_kgp7f6to http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_kgp7f6to/flavorId/0_zhby837j/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Tue, 10 Nov 2015 11:59:08 -0500 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. <br> elldub 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. <br> 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. <br> 1:21:51 futures, options, forecasting, fundamental analysis, technical analysis, matroidparity, parity, currency ARE139: Lecture 14, Fall 2015 http://itunes.ucdavis.edu0_iybvnver http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_iybvnver/flavorId/0_1jvebp1g/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Thu, 12 Nov 2015 12:02:08 -0500 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. <br> elldub 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. <br> 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. <br> 1:24:30 futures, pricing, financial markets, stocks, hedges, commodity, markets, colin carter, uc davis ARE139: Lecture 15, Fall 2015 http://itunes.ucdavis.edu0_lxq0iksr http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_lxq0iksr/flavorId/0_y6w0h798/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Tue, 17 Nov 2015 12:08:07 -0500 Lecture 15: Carter continues the discussion of hedging, giving examples of currency and financial hedges. The concept of an optimal hedge is discussed.<br> elldub Lecture 15: Carter continues the discussion of hedging, giving examples of currency and financial hedges. The concept of an optimal hedge is discussed.<br> Lecture 15: Carter continues the discussion of hedging, giving examples of currency and financial hedges. The concept of an optimal hedge is discussed.<br> 1:29:55 futures, options, hedging, pricing, colin carter, uc davis, markets, stocks, commodity ARE139: Lecture 16, Fall 2015 http://itunes.ucdavis.edu0_quzfe8zp http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_quzfe8zp/flavorId/0_qlk2bcvl/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Thu, 19 Nov 2015 12:08:13 -0500 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.&nbsp; Numerous examples of options trades are presented.<br><br> elldub 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.&nbsp; Numerous examples of options trades are presented.<br><br> 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.&nbsp; Numerous examples of options trades are presented.<br><br> 1:29:56 futures, options, pricing, hedges, commodity, markets, stocks, colin carter, uc davis ARE139: Lecture 17, Fall 2015 http://itunes.ucdavis.edu0_h10zlxsm http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_h10zlxsm/flavorId/0_4q78p06i/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Tue, 01 Dec 2015 12:08:09 -0500 Lecture 17 introduces the concept of put-call parity and its implications for options pricing. Arbitrage relationships between options contracts are discussed. <br> elldub Lecture 17 introduces the concept of put-call parity and its implications for options pricing. Arbitrage relationships between options contracts are discussed. <br> Lecture 17 introduces the concept of put-call parity and its implications for options pricing. Arbitrage relationships between options contracts are discussed. <br> 1:29:55 futures, options, uc davis, colin carter, arbitrage, put-call, parity ARE139: Lecture 18, Fall 2015 http://itunes.ucdavis.edu0_2svp0ew7 http://cdnapi.kaltura.com/p/1770401/sp/177040100/playManifest/entryId/0_2svp0ew7/flavorId/0_48tzwfjp/protocol/http/format/url/a.mp4?clientTag=feed:0_q69yxq0i Thu, 03 Dec 2015 11:34:09 -0500 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. <br> elldub 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. <br> 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. <br> 58:56 futures, options, hedging, pricing, uc davis, colin carter, arbitrage, trades