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Options and Futures

Hedging

As a financial expert, it is important to understand the concept of hedging. This involves mitigating the risk of price fluctuations in the cash market by taking a counter position in the futures market. This strategy, known as hedging, is commonly used by businesses to safeguard against unfavorable price changes. There are two types of hedging, namely Selling (Short) Hedge and Purchasing (Long) Hedge, which are both utilized by hedgers to protect their assets.

Federal Reserve System

The Federal Reserve System, established in 1913 through the Federal Reserve Act, serves as a vital tool in achieving the economic and financial objectives of the United Stat...

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Futures Commission Merchant

An essential player in the world of futures trading is the Futures Commission Merchant (FCM). They act as intermediaries between buyers and sellers of futures contracts, ope...

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Option Spread

In the financial world, a common practice known as spread trading involves buying and selling option contracts, futures, and/or cash positions at the same time. This allows i...

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Position Limit

A crucial aspect of futures trading involves understanding the concept of position limits. These limits, set by the Commodity Futures Trading Commission and/or the exchange,...

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