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Penny Millionaire Lottery Derivatives are contracts netting aims to exchange risk, a financial contracts derive their value from the value of real or other financial (stocks, bonds, currencies and foreign goods and gold) and be of such financial contracts specified period of time in addition to the price of certain terms and conditions to be determined when editing the contract between the parties to the buyer and seller and months images futures (futures) and options (options), futures ((forward Currency contracts. exchangers) swaps).
First of Penny Millionaire futures:
Penny Millionaire Futures contract is a future need to be two Contracting Parties to the delivery or receipt of a commodity or foreign currency or securities at an agreed price at a specified date in order to hedge and avoid the risk of price volatility.
Staff of futures contracts:
A price in the future:
Is the price agreed upon by the parties in futures contracts for the completion of the exchange transaction is subject of the contract in the future.
(B) the date of delivery or settlement:
Is the date agreed upon by the parties to the contract to complete the exchange process.
C – replace the contract:
Intended place of the agreed contract thing to sell it and buy it between the parties to the contract, which may be the goods, securities, indices, currencies …
D buyer decade:
Is committed to receiving party thing replaces the contract by paying the agreed price for the second party (the seller) the date specified in the future.
Party is obligated to pay the underlying thing in exchange for the agreed price of the first party (the buyer) the date specified in the future.
Investors purposes in future contracts
There are two types of investors in the futures first type that uses that type of investment for the purpose of the reserve and protection from future price changes and type II speculators in those contracts in order to make a profit.
(A) the use of futures contracts for the purpose of coverage:
The conclusion of contracts for the sale or purchase of the dates of future implementation of fixed prices, and that in order to reduce the losses that could be exposure to them because of adverse changes that may occur in the future on commodity prices.
1 – Coverage Long Center:
If there is an investor in need of an asset in the future, it can take a long position, contracted to buy that asset through the futures market, and is the so-called long-coverage.
2. Coverage short center:
Intended coverage short center, taking the Investor Center on the seller of a futures contract to face the risk of decline in the price of origin is owned or is expected to be owned.
3. renewable coverage:
Look the importance of renewing coverage strategy, when the period originally planned to acquire more than the date of delivery of active futures.
4. cross-coverage (coverage of various origin):
We can call on the intersecting coverage coverage of indirect, as distinct from direct coverage. Direct Valtguetah be through a future contract on the origin similar to the original place of coverage.
(B) the use of futures contracts for the purpose of speculation:
Seize any opportunity to achieve profits through speculation in the futures.
Types of futures contracts:
– Futures contracts on commodities
– Futures contracts on exchange rates
– Futures contracts on interest rates (futures contracts on fixed income) and financial assets.
– Futures contracts on equity indices.
Second choices (options):
Choices (options) is an agreement for trading at the time of an agreed future at a fixed price implementation knows which gives the right to one of the parties in the sale and purchase of a certain number of securities from the other party at an agreed price in advance.
Types of options contracts:
A – a put option:
Allows selection of sales opportunity for an investor to protect itself from the risk of decline in market value of securities owned by which gives him the right to sell those shares to the second party to the purchase price in exchange for a reward so buyer and if the price of the right of non-implementation up to that contract.
B – the purchase option
Call option gives the buyer the right to receive securities contracted financial or refrain from after paying a certain amount to the owner of the stock to meet with him to give him this right.
Choices developed decades (exotic option):
Choices futures contracts, options contracts for the vehicle, the differential options contracts, exchange options contracts, options contracts for the border, bilateral options contracts, options contracts retroactively, decades choices average prices.
Third futures ((Forward Currency Contracts .:
Futures or forward contracts are those contracts that commit the seller to the buyer delivers the item shop contract at a later date, at a price agreed upon by the time of contracting, called the exercise price.
Fourth exchanger) Swaps):
Exchangers) Swaps) a contractual obligation between two parties involves swapping a certain type of cash flow or a particular asset is owned by one of the parties against the flow or asset owned by the other party at the current price and under the terms agreed upon when the contract that the asset exchange shop contract at a later date and used swaps for the purpose of what follows:
– Prevention of price risk in different periods
– Reducing the cost of funding
– Access to new markets
– The introduction of vehicle tools.
Types of swaps:
IRS Interest Rate Swaps:
An agreement between two parties to exchange floating interest rate on a fixed rate on a specific amount of a particular currency.
Currency swaps Currency Swaps:
Is a buy or sell a particular currency at a certain maturity and then buy or sell the same currency or currency approach in the last maturity.
Optional swap Swap Options (SWAPTION):
An entry in a particular PennyMillionaire swap option on a specified date in the future, for example, optional simple interest swap, a swap option ever guaranteed fixed interest bond ever variable interest at a certain time.
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Variable interest rate:
May be agreed Parties to the contract swap to be a variable interest rate is the average interest rate in the market for instant settlement contract swap, and is a variable interest rate calculated based on the most changing interest rates on used .altsoeh: are settled swap contract on a periodic basis agreed upon (quarterly, half Yearly, …) . Penny Millionaire swap contract: is the amount agreed upon between the parties to the swap contract, and represents the value of the swap contract economic Nevsh.alohmah of derivative contracts: (1) to provide service coverage against the risk of price changes: 2 – a tool to explore the expected price in the market present: 3. the availability of investment opportunities for speculators: 4. provide a better opportunity to plan cash flows: 5 – facilitate and activate the deal on assets place of contracting 6- speed of implementation of investment strategies: the risks of dealing in financial derivatives: – traditional risk – market risk – the risk credit – operational risks, regulatory: – legal risks: – risk risk 1. link 2. risk protection ratio of 3. liquidity risk is the risk 4. pricing 5. leverage risk