Commodity and Derivatives Market TYBMS Semester V

Commodity and Derivatives Market

TYBMS

Semester V

1. Introduction to Commodities Market and Derivatives Market (15 Lec.)
a) Introduction to Commodities Market : Meaning, History & Origin, Types of Commodities Traded, Structure of Commodities Market in India, Participants in Commodities Market, Trading in Commodities in India (Cash & Derivative Segment), Commodity Exchanges in India & Abroad, Reasons for Investing in Commodities
(b) Introduction to Derivatives Market: Meaning, History & Origin, Elements of a Derivative Contract, Factors Driving Growth of Derivatives Market, Types of Derivatives, Types of Underlying Assets, Participants in Derivatives Market, Advantages & Disadvantages of Trading in Derivatives Market, Current Volumes of Derivative Trade in India, Difference between Forwards & Futures

2. Futures and Hedging (15 Lec.)
(a) Futures: Futures Contract Specification, Terminologies, Concept of Convergence, Relationship between Futures Price & Expected Spot Price, Basis & Basis Risk, Pricing of Futures Contract, Cost of Carry Model
(b) Hedging: Speculation & Arbitrage using Futures, Long Hedge – Short Hedge, Cash & Carry Arbitrage, Reverse Cash & Carry Arbitrage, Payoff Charts & Diagrams for Futures Contract, Perfect & Imperfect Hedge

3. Options and Option Pricing Models (15 Lec.)
(a) Options: Options Contract Specifications, Terminologies, Call Option, Put Option, Difference between Futures & Options, Trading of Options, Valuation of Options Contract, Factors affecting Option Premium, Payoff Charts & Diagrams for Options Contract, Basic Understanding of Option Strategies
(b) Options Pricing Models: Binomial Option Pricing Model, Black - Scholes Option Pricing Model

4. Trading, Clearing & Settlement In Derivatives Market and Types of Risk (15 Lec.)
(a) Trading, Clearing & Settlement In Derivatives Market: Meaning and Concept, SEBI Guidelines, Trading Mechanism – Types of Orders, Clearing Mechanism – NSCCL – its Objectives & Functions, Settlement Mechanism – Types of Settlement
(b) Types of Risk: Value at Risk, Methods of calculating VaR, Risk Management Measures, Types of Margins, SPAN Margin