FRM: Cost of carry model to price forwards & futures

The cost of carry model is universally helpful. It summarizes the link between the spot price and the (theoretical) futures price for a commodity. For more financial risk videos visit our website! www.bionicturtl...

[@motas92]

I just want to remind you that this is great material and you are helping tons of people out there! Thanks for the good explanation.

[@TheGadheda]

Thanks for your generosity in teaching ...Your explanations are miles better than my uni lecturer

[@jmeric6824]

Jesus, one of the best explanation of COCM! This is insane! Thx, T!

[@sumantbachewar5346]

Best material available for cost of carry pricing model. Thank you for this.

[@thebekzod]

Great video! Thanks. *Just before the financial 2008 crisis indeed

[@sameermankar1737]

thank you so much. how this topic works was eating my brains out, great explanation

[@bionicturtle]

@TheMunishk Thank you, I really appreciate the kind words!

[@bionicturtle]

@JMuthukamatchi Great, we appreciate your support

[@nehcer]

thank you so much for the colorful yet elegant explanation

[@zF15z]

This is great, you put the intuition behind the maths and that makes it make sense in my head :)

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@Keenan Malcolm instablaster :)

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[@kashtonpeter6462]

@Keenan Malcolm happy to help =)

[@sonicfray]

I really like the clarity with which you present your information - and the fact that you use excel is just a bonus. Can you share those files?

[@ngopalakrishna]

Wonderful, thanks for the clear explanation - I already joined bionic turtle!

[@rodctenis]

Great videos! I am a loyal subscriber and follower!!

[@bionicturtle]

Thank you for watching!! We are happy to hear that you enjoy our videos!!

[@deshdeewana7162]

Great Videos........ The Best one I have ever seen.......

[@bionicturtle]

+desh raj Thank you for watching! We are happy to hear that our videos are so helpful!

[@Kvmurali32]

Thanks for such a clear explanation on this topic.

[@icebeating]

amazing, just wondering do we have to discount q either, as it may be paid in the future.
It s very helpful, can u post something concerning Time varying optimal Hedging Ratio ?

[@victorsardon3521]

If the future value of q (dividends/income aka monetary benefits) is given, we just have to add that amount separately at the end of our calculation using the formula without q. So the formula would be [ S0 * e^(r+u-y)(T) ] - FV of dividends/income. Also q can be given as a present value amount, in which case we would have modify the formula to (S0 - PV of dividends/income) * e^(r+u-y)(T).

[@DiegoGozer]

Wow Really nice. I'm looking for some theory or model to pricing a commodity-based contract. Do you have some material or some guidelines to suggest? Thank you so much.

[@JayMuthukamatchi]

Well explained. Found it very useful.

[@dhavalajmera4723]

thanks for making it so simple to understand :). I have a question though. We've been taught to calculate the forward price as
F = (spot price + storage cost) * EXP((risk free rate - convenience yied)*time)
Is this the same as your formula?

[@victorsardon3521]

Your formula is if the present value of the storage cost is given, that is the storage cost at time 0. The formula he uses incorporates the storage cost as a percentage, not an amount, so it directly affects the continuous compounding. You use the whichever formula based on what is given. Storage costs can also be given as a future value, in which case the formula would be F = [ spot price * EXP((RFR - convenience yield)*time) ] + FV of storage cost

[@khadijaahmed3116]

Amaizing video keep it up !

[@bionicturtle]

Thank you, I will! (this video is almost ten years old)

[@icebeating]

hi, your video is very interesting, I'm just wondering that do we have to discount q either, as that may be the q in the future.
Thank you very much, Can you share another video about Time varying OHR?
:)

[@nyoka08]

Thank you, this video was very helpful.

[@erikbennacer7949]

I have hard time finding a straight definition or at least a couple of real examples of what is convenience yield. Is there anything concrete that can be applied?

[@bionicturtle]

Thank you!

[@jjjourneyaddicted3044]

it very clear about method to calculate theoretical price but should suggestion about the method to make profit like that the theoretical price should compare with spot price when if the theoretical price is higher than spot price , It should use strategic Long spot and short futures for make profit or if the theoretical price lower than spot price use strategic short spot and Long futures it can make profit

[@hitendramehra5439]

nice!! very informative

[@Deduck1977iwb]

Hi! Great presentation! Thanks! Do u happen to have any soft copy of the excel that u can send to us so we can take reference to it thanks.!

[@rhorowicz]

Excellent, thanks!

[@VariableYoung]

Thank U,i actually have an exam next friday

[@pankajrajput7]

GOOD JOB!

[@BLOODINTHECUP]

Thanks!

[@delightP]

brilliant

[@anapatriciaortiz9445]

genius!!!

[@chengjonathan8206]

awesome