Basics of Financial Derivatives in Bangla
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- Опубликовано: 15 окт 2024
- The Basics of Financial Derivatives
Derivatives can be used to hedge a position, speculate on the directional movement of an underlying asset, or give leverage to holdings. Their value comes from the fluctuations of the values of the underlying asset.
Originally, derivatives were used to ensure balanced exchange rates for goods traded internationally. With the differing values of national currencies, international traders needed a system to account for differences. Today, derivatives are based upon a wide variety of transactions and have many more uses. There are even derivatives based on weather data, such as the amount of rain or the number of sunny days in a region.
KEY TAKEAWAYS
Derivatives are securities that derive their value from an underlying asset or benchmark.
Common derivatives include futures contracts, forwards, options, and swaps.
Most derivatives are not traded on exchanges and are used by institutions to hedge risk or speculate on price changes in the underlying asset.
Exchange-traded derivatives like futures or stock options are standardized and eliminate or reduce many of the risks of over-the-counter derivatives
Derivatives are usually leveraged instruments, which increases their potential risks and rewards.
Common Forms of Derivatives
There are many different types of derivatives that can be used for risk management, for speculation, and to leverage a position. Derivatives is a growing marketplace and offer products to fit nearly any need or risk tolerance.
Futures
Futures contracts-also known simply as futures-are an agreement between two parties for the purchase and delivery of an asset at an agreed upon price at a future date. Futures trade on an exchange, and the contracts are standardized. Traders will use a futures contract to hedge their risk or speculate on the price of an underlying asset. The parties involved in the futures transaction are obligated to fulfill a commitment to buy or sell the underlying asset.
In this example, it is possible that both the futures buyer and seller were hedging risk. Company-A needed oil in the future and wanted to offset the risk that the price may rise in December with a long position in an oil futures contract. The seller could be an oil company that was concerned about falling oil prices and wanted to eliminate that risk by selling or "shorting" a futures contract that fixed the price it would get in December.
It is also possible that the seller or buyer-or both-of the oil futures parties were speculators with the opposite opinion about the direction of December oil. If the parties involved in the futures contract were speculators, it is unlikely that either of them would want to make arrangements for delivery of several barrels of crude oil. Speculators can end their obligation to purchase or deliver the underlying commodity by closing-unwinding-their contract before expiration with an offsetting contract.
Not all futures contracts are settled at expiration by delivering the underlying asset. Many derivatives are cash-settled, which means that the gain or loss in the trade is simply an accounting cash flow to the trader's brokerage account. Futures contracts that are cash settled include many interest rate futures, stock index futures, and more unusual instruments like volatility futures or weather futures.
Forwards
Forward contracts-known simply as forwards-are similar to futures, but do not trade on an exchange, only over-the-counter. When a forward contract is created, the buyer and seller may have customized the terms, size and settlement process for the derivative. As OTC products, forward contracts carry a greater degree of counterparty risk for both buyers and sellers.
Counterparty risks are a kind of credit risk in that the buyer or seller may not be able to live up to the obligations outlined in the contract. If one party of the contract becomes insolvent, the other party may have no recourse and could lose the value of its position. Once created, the parties in a forward contract can offset their position with other counterparties, which can increase the potential for counterparty risks as more traders become involved in the same contract.
Swaps
Swaps are another common type of derivative, often used to exchange one kind of cash flow with another. For example, a trader might use an interest rate swap to switch from a variable interest rate loan to a fixed interest rate loan, or vice versa.
Imagine that Company XYZ has borrowed $1,000,000 and pays a variable rate of interest on the loan that is currently 6%. XYZ may be concerned about rising interest rates that will increase the costs of this loan or encounter a lender that is reluctant to extend more credit while the company has this variable rate risk.
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স্যার যেভাবে উদাহরণ দেন, তেমন আর কোথাও পাই না। অসংখ্য ধন্যবাদ।
Welcome
বাংলায় এরকম হেভী টপিকের উপর এরকম লেকচার খুবই কম! অসাধারন!
ধন্যবাদ স্যার।
বিষয়টি নিয়ে আরও কয়েকটি ভিডিও চাই।।। ধন্যবাদ । শুভকামনা
Awesome.
Thank you sir. Nice presentation ❤
Thank you sir for your interesting discussion.
Thank you Sir. ভিডীওর পাশাপাশি Description box এও content দিয়ে দেওয়ার জন্য।
Nice presentation
Sir, if we get the Soft copy link in your every video, we will be highly benefitted.
Thank you sir. It’s very helpful!!
Sir Assalamu aalikum. You mentioned, Futures are traded in EXCHANGE. So forwards won't be in OTC? That's mean It's trade able in anywhere. Will you please give a check?
It's a great learnings sir
Many many thanks... Sir...
স্যার loanable fund এর উপড় একটা ক্লাস চাই
Sir please give some more videos on this topic. In details.
excellent
Thank you very much Sir
Thanks
Welcome
Thank you sir
So nice of you
Derivative কে বাংলায় কি বলে?
😅
excellent