CHAPTER11

Futures, Forwards, and Related Derivatives

In This Chapter

  • Learning about futures and forwards
  • The mark to market process
  • Swaps, CDOs, and other nonstandard contracts
  • Using options with other derivatives

Just as with options, futures contracts are derivatives. They derive their value from the price of something else. They are standardized contracts traded on organized exchanges, used by both hedgers and speculators. They are valued based on the price of the underlying asset, the exercise price, the expiration date, interest rates, and the volatility of the underlying asset—the same as options.

However, one key difference is the holder ...

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