TraderDerivatives
Simon BrownJustOneLap.com
SimonBrown.co.za13th October 2011
Wealth warningTrading derivatives can offer significant returns BUT also subject you to significant losses if the market moves against your position. You may, in a relatively short time, sustain more than a total loss of the funds placed by way of initial margin. You may be required to deposit a substantial additional sum, at short notice, to maintain your margin balance. If you do not maintain your margin balance your position may be closed out at a loss and you will be liable for any resulting deficit.
Before you start•System•Risk management•Product knowledge•Realistic expectations•Psychology
•Equities
Correlation•You want to trade non-correlated assets
•BUT confirm the lack of correlation•AND know the product
Market Maker•Buying and selling at fair value•Ensures products tracks underlying
•Other traders can get in the ‘middle’ of the market maker
Expiry•Know expiry date•Near dated vs. Further dated?•Does your broker;•close you out?•roll your contract?
Costs•All costs?•% underlying value•Flat brokerage•Roll over costs?
Single Stock (SSF)•Equities•ETF’s
Index futures•ALSI•ALMI•DTOP•FINI
Options•Warrants•Index (including barrier)•Equities•Currency•Commodity•Instalments•Equity
Agri futures•Maize (white and yellow)•Bread milling wheat•Soyabean•Sorghum•Sunflower
Commodity futures•Corn•WTI Crude•Copper•Silver•Platinum•Gold
Licensing agreement with CME Group
Currency Futures•US $•Euro•Sterling•Australian $
All vs. The Rand
IDX•Berkshire Hathaway•Apple•Nokia•Shell•Citi•Dell•Rio Tinto
Interest rate futures•Bond futures•Jibar futures•Index futures
Re-cap•WMD•Know you product•Know yourself
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TraderDerivatives
Simon BrownJustOneLap.com
SimonBrown.co.za13th October 2011