国际期货市场运作2BeginningwiththeBa.ppt

Chapter 2 Beginning with the Basics,Suppose that you and I lived in rural area. I raise beef cattle. You raise corn 15 miles down the road.,Why do we need the futures market?,Each fall, when your corn comes in, you truck the entire crop to me, and I buy it to feed to my steers. To make things fair, we agree that I will pay you the cash price for corn on an exchange on the day I take delivery.,Corn is important to both of us. It is your principal crop; it is my main cost in feeding cattle.,Lets set our corn price now for next fall Lets pick a price that allows each of us a reasonable profit and agree on it.,Definition of a futures contract,A futures contract is an agreement between a seller and a buyer. The agreement calls for a seller to deliver a specified quantity of a particular grade of a certain commodity or its cash equivalent to a predetermined location on a certain date.,What is Risk Transfer and Why transfer it?,Ask any farmer about the risks involved in growing a crop of corn.,What is Risk Transfer and Why transfer it?,If the weather during the growing season is too dry or too wet or too windy, the farmer may have a poor crop, but so will other farmers.,Who Benefits from the Transfer of Risk?,The transfer of risk using a futures contract can benefit the buyers, or the seller, or both.,Who Benefits from the Transfer of Risk?,The trader who took the other side of the corn transaction is unhappy to be losing $1 on the trade. The risk in this case has been transferred from the producer (seller) to the buyer.,Who Benefits from the Transfer of Risk?,On a broader scales, the consumer or end user benefits as well,Market Participants,Four broad categories of market participants in futures trading: Producer End User Speculator Floor Trader or Pit Broker,Producer,These goods can be anything from grain to livestock to Swiss francs to silver. The producer may be a seller of goods as well as a buyer.,End User,This group often consists of manufacturers or large users of raw products.,Speculator,The speculator can be either a buyer or a seller, depending on his or her analysis of and orientation to the markets. The speculator is often willing to take a position contrary to the current market trend in the hope of making a profit.,Price Risk,Price risk occurs as a result of time intervention in a transaction.,Price Risk,Intense competition Seasonal harvest and seasonal demand.,Price Risk,In short, Time and unpredictable circumstances,The Early History of the Futures Contract in Europe and Japan,In medieval Europe, fair letters were the crude forerunners of the modern futures contract. The first recorded example of actual futures trading occurred in Japan in 1697.,The History of the Futures Contract in China,Zhengzhou Commodity Exchange (ZCE), the first futures market in China, was established on October 12th, 1990. ZCE started futures trading on May 28th, 1993 with 5 commodities listed.,Dalian Commodity Exchange (DCE),DCE was founded on February 28, 1993, and began futures trading on November 18 in the same year.,Shanghai Futures Exchange,CHAIRMAN OF CHINA SECURITIES REGULATORY COMMISSION,Mr. Shang Fulin was born in November 1951 into a family of Han ethnic origin.,China Securities Regulatory Commission,Historical Background,China Securities Regulatory Commission,The establishment of the State Council Securities Commission (the “SCSC“) and the China Securities Regulatory Commission (the “CSRC“) in October 1992 marked the formation of this regulatory body.,China Securities Regulatory Commission,The scope of the authority of the SCSC and the CSRC gradually expanded with the growth of the securities markets.,Regulation of the Futures Industry in USA,In 1974, Congress passed the Commodity Futures Trading Commission Act.,National Futures Association (NFA),The National Futures Association (NFA) is a self-regulatory organization established in 1982.,National Futures Association (NFA),To assure “high standards of professional conduct and financial responsibility” on the part of its members.,Who Is Required to Register with the CFTC ?,Futures Commission Merchant (FCM) Introducing Broker (IB) Commodity Pool Operator (CPO) Commodity Trading Advisor (CTA) Associated person (AP) An AP is an individual who solicits orders, customers, or customer funds on behalf of an FCM, IB, CTA, or CPO.,Protection for the Individual Investor,Potential abuses in the futures industry fall into three broad categories: unfair trading practices, credit and financial risks, and sales practices abuses. Unfair trading practices include price manipulation, prearranged trading, and trading ahead of a customer.,Trading The Futures Contract 1,If I choose to enter a contract as a buyer or a seller, what happens if the contract expires and I have to make good? Where will I find all those pork bellies to deliver? What if Im a buyer? Will my freezer hold 40,000 pounds of frozen bacon?,Trading The Futures Contract 2,You have nothing to worry about. Fewer than 5 percent of all futures transactions result in delivery. The vast majority of contracts are offset or liquidated prior to delivery. You can liquidate your position prior to the delivery date of the contract.,Trading The Futures Contract 3,A commodity futures trader enters into a futures contract by agreeing to sell a commodity or buy a commodity according to the precise contract specifications established by the exchange.,Trading The Futures Contract 4,The position I have established is a “short” position. Now that I have a short position in corn, I have two alternatives.,Defining Margin,In the futures market, both parties to the transaction put up earnest money, which is called margin. Margin usually amounts to approximately 1 percent to 5 percent of the contract value, depending upon requirements of the futures exchange. This is called initial margin.,Who Sets Margin Requirements and Why 1,Margin requirements are determined by and set by the various futures exchanges.,Who Sets Margin Requirements and Why 2,If margins are raised suddenly and by a substantial amount, this is often an indication that the given futures exchange is concerned about the high price level of a market or about its volatility.,Margin and Broker Protection,The purpose of margin is to protect the broker and the brokerage house as well as the customer.,Margin and Broker Protection,Since the broker is liable in the event that a customer cannot meet a margin call, the house must set margins high enough to minimize the risk of the broker being liable for losses.,WHAT IS A HEDGE ?,Hedging occurs when a producer or end user takes a position in the futures market that is the opposite of his position in cash market.,电解铜车间,铜材加工过程,电解铜,铜杆,铜线,Making an Example for a Hedge,Example: Your are a copper company, you will produce 100-ton copper three month later, so you will sell them after 3 months. Now you want to do a hedge for a protection of the 100-ton copper.,In the futures market, you can sell 100 tons at 17,500 yuan pre ton in December. When the time reach December, if price decrease 100 yuan pre ton, in futures market you will get 10,000 yun (100tons100yuan) totally.,Making an Example for a Hedge,Making an Example for a Hedge,So the factual result is you lock in the price of your copper at 17,500 yuan pre ton in December. You can gain 1,750,000 in December. You do not lose money though the price goes down.,How Hedging Transfers Risk 1,When a hedge is placed, risk is transferred from the hedger to the individual who has taken the other side of the contract.,Cash Market Futures Market - - Wheat price $3.85 Fall Sell wheat futures at $ 3.90 Sell wheat at 3.44 Next May Buy wheat futures 3.49 Loss $ .41/bushel Gain $ .41 Net gain or loss = 0,Short Hedge in Wheat Futures ($/bushel),Short hedgers comprise those who grow, store, process, or distribute a cash commodity. A China oil importer with a tanker of crude on the high seas would use a short hedge to protect his cargo from a price decline. A big mill would use a short hedge for the wheat stored in its warehouses. The common denominator is risk of loss due to a decline in the cash price.,Short Hedge in Wheat Futures ($/bushel),Cash Market Futures Market - - Cash corn price $2.85 Now Buy corn futures at $ 2.96 Buy cash corn at 3.10 3 Months later Sell corn futures 3.21 Opportunity loss $ .25/bushel Gain $ .25/bushel Net gain or loss = 0,Long Hedge in Corn Futures,Advantages and Disadvantages of Hedging,The main advantage is that of locking in a price whether you are a buyer or a seller. The disadvantage is that when you lock in costs or profits, you may be doing so too soon and thereby limiting your profit potential.,Essential Elements for profitable Trading,1. An Effective Trading System or Method 2. Risk Management: 3. Discipline: This includes all aspects of trader psychology: self-control, persistence, positive attitude, and so on.,An Effective Trading System or Meth