Archive for 'Forex Bonds Options and Futures'

Options and Futures

Posted on October 20th, 2008 by admin, under Forex Bonds Options and Futures.

Options and Futures

Short Call Option

Option contracts is a contract which, in exchange for a premium, gives the purchaser the right (no obligation) to buy or sell financial assets at a price at a specified date (expiration date) or earlier.

Futures contract is a contract to buy or sell (futures) or that represent rights (options) to buy or sell a foreign currency at a particular price within a specified period of time.

The main difference between the options and futures is that futures is the obligation, as an option is the right

Options is the right either to buy or to sell an asset (in our case - futures) at a fixed price at any time during a certain period of time.

An option that gives the right to buy an asset - futures, known as CALL; option, which gives the right to sell futures, is called PUT.

At any given time, the buyer (holder) of option can fulfill it. In this case, recorded the sale of a futures contract at a price equal to the price performance option, this means that the option shares on the futures contract.

In the case of the execution of CALL option buyer of an option becomes buyer of futures and the seller of an option becomes the seller of futures. In the case of execution of PUT option buyer the option becomes a seller of futures and option seller becomes a buyer of futures.

In addition to the buyer’s ability to execute the option at any time, there is also an opportunity for both the buyer and the seller of option to close its position through the backward transaction (as futures).
One must distinguish the price for the option execution and the price of the option itself (premium).

When a contract price of the option (premium) the buyer of the option always pays the seller as a reward for the right to continue to execute this option. Price is an option as a result of stock market trading.

Price of performance (Strike) is the price at which the option entitles the holder an option to buy or sell futures underlying the option, the price performance are standard and are established by exchange for each option contract.
Thus, the design option includes a choice of one, but two prices. The Bidder first determines the appropriate option to him at the cost of execution, and then in the bidding process is determined by the price of the option (premium).

Option strategies can be used in any situation in the market and any predictions as to make market participants. There are many strategies for the use of stock options - both for hedging or speculation.

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Bond loans

Posted on July 11th, 2008 by admin, under Forex Bonds Options and Futures.

This article describes bond loans to Forex players.

The organization and placement of bonded loans allows financial markets to involve larger sums under lower rates than loans on bill loans. However, this type of financing may not be available immediately to all enterprises. It is essential that the company-emitter had already positive public credit history, that is attracted funds from the previously open markets, for example, by borrowing bill loans. It is necessary to note also that the production and placement of bonds is more difficult and lengthy procedure than the placement of bills and much more expensive for the organization of the release.

However, all this is justified, because the fact of placement of bonds considerably raises the image of company, and if there were several successful releases of bonds and there were no problems with their repayment, investors start to treat with greater trust to the emitter. Besides the positive public credit history of the company is very valuable non-material active allowing to place bonded loans under lower interest rates in further. It makes bonds of one of the cheapest forms of financing.

Thus, the emitter becomes recognizable in business community of investors, portfolio managers, managers, speculators and financiers. Demand for papers of the emitter raises, that opens prospect to the company to be on the share market, after IPO. The public companies have a number of advantages over private companies, they have a good tool of financing of the business that makes real realization of many expensive projects.

Process of issue of bonds consists of eight basic stages:

  • Carrying out of the analysis, whether company can place in general the enterprise bonds;
  • Careful study of parameters of the future bond loan;
  • Decision-making on release of bonds
  • Realization of activities to raise interest of investors to release of bonds of the Emitter;
  • Preparation and registration of the prospectus of issue;
  • Placement of bonds among investors;
  • Registration of the report on release;
  • Organization of the secondary market.

The organization of the secondary market is the important stage in placing of the bond loan, allowing investors to buy and sell bonds freely, diversifying their forex investments and increasing demand for papers of the Emitter.

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Ordinary shares as the tool of investment

Posted on July 4th, 2008 by admin, under Forex Bonds Options and Futures, Stocks.

This article describes ordinary shares and investments basics to Forex players.

Ordinary shares attract Forex investors for different reasons: it is an opportunity to earn much, if the rate will “fly up”, for owners of large packages of dividends can provide a permanent source of income. Considering variety of shares traded on the stock market (more than securities 20000 in U.S.) – it could be argued that whatever is investor’s objective, he could always pick up the paper, suitable for his investment strategy.

The basis of attractiveness of shares is that their owner is entitled to participate in profits of the company. Naturally, in case of rapid growth of company income rate of its shares also grows - the history of the stock market knows many examples when the stock price increases in the tens and hundreds of times by year or two. Bad aspect is that the investor is not only not guaranteed any level of profitability, but simply keeping enclosed means in safety. Stock market knows a lot of stories when strongest market falls and bankruptcies of largest companies such as the crisis of 1987 and 1999-2000 in USA, the Russian stock market collapse in May of 2006; Enron collapse and bankruptcy of YUKOS.

Stock indices - Dow Jones (S&P500,NASDAQ) have stable growing momentum in the long scale.

Difficulty, therefore, lies in correct selection of shares for inclusion in a portfolio of the investor.

 

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Investing basics

Posted on June 18th, 2008 by admin, under Forex Bonds Options and Futures.

In this section we will view investing to financial instruments – deposits, promissory instruments (actions, bonds), and so-called derivative instruments (futures and options – commodity, index etc.)

This section is intended for those who are going to invest in the amount of 10000 dollars and more and more concerned with reducing risk than ultra-high returns. In so doing, many of you do not have a serious investment experience and do not understand all the “pitfalls” of the process.In our time Internet gives the real opportunity for anyone, not even being a professional, multiply their funds by investing them in world financial markets In this section we will view investing to financial instruments – deposits, promissory instruments (actions, bonds), and so-called derivative instruments (futures and options – commodity, index etc.)

This section is intended for those who are going to invest in the amount of 10000 dollars and more and more concerned with reducing risk than ultra-high returns. In so doing, many of you do not have a serious investment experience and do not understand all the “pitfalls” of the process.

In our time Internet gives the real opportunity for anyone, not even even being a professional, multiply their funds by investing them in world financial markets.

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