Futures & Forwards Tools
Explore tools for pricing, hedging strategies, and contract valuation to master futures and forward contracts.
Pricing Tools
Forward Pricing
Analyze the pricing for forward contracts on different types of assets:
- Investment assets without income
- Assets with known income or known yield
- Foreign currency using interest rate parity
Futures Pricing
Calculate futures prices for various scenarios, including:
- Stock index with dividend yield
- Commodity with storage costs
- Commodities with proportional/non-proportional storage costs and convenience yield
- Cost of carry for investment and consumption assets
Hedging Strategies
Hedging Basics
Understand the foundational concepts of hedging, including:
- Computing the basis hedge
- Calculating the minimum variance hedge ratio
- Applying the tailing the hedge adjustment
Equity Hedging
Explore strategies to hedge equity portfolios, such as:
- Computing the hedge for an equity portfolio
- Changing the beta of a portfolio
Contract Valuation
Value of Forward Contracts
Determine the value of forward contracts based on position:
- Long position: Understand how value fluctuates as the contract approaches maturity
- Short position: Learn how the counterparty’s obligations impact valuation
Delivery Timing Decision
Decide on the best timing for contract delivery:
- Deliver as soon as possible: Minimize costs and risks
- Deliver as late as possible: Maximize benefits based on market conditions