Thank you so much for your lecture. You are a lot better than our professors. I wish you can still post more lectures related to finance in future. God bless you, Sir
Good vid mate. One thing about the zero sum, one would have several needs and several reasons to hold or sell futures. For ex, one is taking big amount of futures contracts, but his main activity relais to option trading, he will "lose" from the future side, gain big from the option side. Long story short, future zero sum is the small picture
Hedging is synonymous to insurance. All insurance and hedging are zero sum games but the purpose is to protect an asset from financial losses by paying a premium. It's the "peace of mind" because if something happens to the asset at least it's financially protected. So if nothing adverse happens to the asset, you've only paid the premium to cover any potential loses. It's the peace of mind insurance gives you. Whereas Speculation is just gambling. Rather than give you peace of mind, it creates stress and tension because it's just gambling. Insurance allows you to sleep comfortably at night knowing your asset it protected whereas Speculation keeps you awake at night not knowing which way the price might move.
great video...reality check...get rid of the Zero Sum Game because the liquidity in the futures and options markets are so vast...more than your local typical medieval meat market.
Shorting T-Bonds protect from a rise in interest rates. Corporations issue debt in the form of bonds and pay interest. So if interest rates rise they must pay higher rates to holders of debt. To protect from a rise in rates they sell bonds as insurance.
Can someone help me ?? This is my problem... I am an US exporter and I am expected to receive £925,000 in 3 months’ time for the payment of some products which you sold today to an UK importer. I am concerned with exchange rate movements which might result in an effective loss in 3 months’ time. I decided to hedge the exposure... questions are: 1. Should I buy USD or sell GBP ? 2. How many contracts should I buy/sell ?? I sincerely ask your help...Beforehand, thank you very much
+Nurul Kamilah if u expect the GBP will appreciate against the dollar, then u should enter in a long position ( buy ) for today's spot rate. however, if u expect that the GBP will depreciate against the dollar, then u must enter in a short position ( sell ) at today's spot rate. u must be aware of the movement in the market to make such strategy. for the second question, currency futures come at a standard price, for the dollar, its 100,000 $ and for GBP i guess its 62500. so just divide the 925000 GBP by the individual contract price. i know u would not be needing this answer now, but u asked for help :D
Detailed explanation on futures vs speculating. Thank you for sharing your knowledge!
I like the way you explain. Do you have an explanation about trading scrap metal on LME BASE IN % price?
Sorry, but no plans for anything along those lines. I am writing a substack now if you are interested (kevinbracker.substack.com)
Thank you so much for your lecture. You are a lot better than our professors. I wish you can still post more lectures related to finance in future. God bless you, Sir
Well explained. Thank you!
Thank you teacher
this is superb and let me learn so many things i was seeing this video for my exams i will surely do amazing
thanks!
Good vid mate.
One thing about the zero sum, one would have several needs and several reasons to hold or sell futures.
For ex, one is taking big amount of futures contracts, but his main activity relais to option trading, he will "lose" from the future side, gain big from the option side.
Long story short, future zero sum is the small picture
Hedging is synonymous to insurance. All insurance and hedging are zero sum games but the purpose is to protect an asset from financial losses by paying a premium. It's the "peace of mind" because if something happens to the asset at least it's financially protected. So if nothing adverse happens to the asset, you've only paid the premium to cover any potential loses. It's the peace of mind insurance gives you.
Whereas Speculation is just gambling. Rather than give you peace of mind, it creates stress and tension because it's just gambling.
Insurance allows you to sleep comfortably at night knowing your asset it protected whereas Speculation keeps you awake at night not knowing which way the price might move.
great video...reality check...get rid of the Zero Sum Game because the liquidity in the futures and options markets are so vast...more than your local typical medieval meat market.
Thanks for posting this video.
this is amazing! thank you so much!
Hi! Can somebody explain why are we shorting treasury bonds and how will it fetch us profit ?
Shorting T-Bonds protect from a rise in interest rates. Corporations issue debt in the form of bonds and pay interest. So if interest rates rise they must pay higher rates to holders of debt. To protect from a rise in rates they sell bonds as insurance.
Can someone help me ?? This is my problem... I am an US exporter and I am expected to receive £925,000 in 3 months’ time for the payment of some products which you sold today to an UK importer.
I am concerned with exchange rate movements which might result in an effective loss in 3 months’ time. I decided to hedge the exposure... questions are:
1. Should I buy USD or sell GBP ?
2. How many contracts should I buy/sell ??
I sincerely ask your help...Beforehand, thank you very much
+Nurul Kamilah if u expect the GBP will appreciate against the dollar, then u should enter in a long position ( buy ) for today's spot rate. however, if u expect that the GBP will depreciate against the dollar, then u must enter in a short position ( sell ) at today's spot rate. u must be aware of the movement in the market to make such strategy.
for the second question, currency futures come at a standard price, for the dollar, its 100,000 $ and for GBP i guess its 62500. so just divide the 925000 GBP by the individual contract price.
i know u would not be needing this answer now, but u asked for help :D
+khzam b thanks for replying 😀
are you hedging or speculating ?