Forward Contracts | Introduction to Derivatives (Part 2 of 6)

Introduction to Derivatives - FREE | Corporate Finance Institute®
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This introductory course on the topic of derivatives covers the fundamental knowledge you need to know about derivatives. You will learn to differentiate between forward, futures, options, and swaps contracts. You will also work on practical examples in Excel to calculate the profits/losses for each type of contracts. By the end of this course, you will have the essential knowledge about derivative contracts required to proceed to more advanced topics, such as derivatives pricing and trading.
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[@sergiomendez5068]

You are the best!! Short and sweet explanation

[@judyl.7811]

1:40 Forwards are over-the-counter contracts. Although they can be used for speculating, the customizability makes forwards very useful for hedging.
1:55 For example,, industries that heavily rely on a commodity. Airline on jet fuel, can hedge the price of fuel using forwards to reduce volatile prices.
2:15 five components of a forward contract:
1. underlying asset: interest rate, stock, commodity, currency.
2. expiration date: delivery date.
3. specified price: upfront or not
4. quantity:
5. type of delivery: whether physically settled or cash settled.
3:20 the long and short position: payoff diagram.
3:35 you have locked the price of a barrel of oil for delivery in one year's time.
4:00 we now make a profit of $5 on each barrel of oil because we get it from $50 from forward contract, and $55 in the spot market.

[@esteban_ruiz]

Great video and the excel example was terrific. Thank you

[@muslim5211]

Profit and loss diagram for Forward contract or Futures contract ? You said Futures whereas this video is about Forwards.

[@markgeraldgarcia3628]

8,000 barrels @ $50 is $400,000, right?

[@theodorahmadzamba5836]

true

[@PrantuPramanik]

Hindi or english?