Topic 5. Derivatives

Seller of futures will loose if

• the price of an asset on commodity exchange will go up

• the price of an asset on commodity exchange will go down

• the price of futures will go up

• the price of futures will go down

Air company wants to hedge risk of fuel increase using fuel derivatives. It will

• sell futures or buy call options

• sell futures or sell call options

• buy futures or sell call options

• buy futures or buy call options

Metal producer wants to hedge risk of metal decrease using derivatives. It will

• sell futures or buy put options

• sell futures or sell put options

• buy futures or sell put options

• buy futures or buy put options

Derivative leverage imply that you

• gain more money by trading futures than commodities

• loose more money by trading futures than commodities

• gain or loose more money by trading futures than commodities

• gain or loose less money by trading futures than commodities

Your have some shares of GAZPROM. You want to use options to hedge price decrease of shares.

• You will sell call options or buy put options

• You will sell call options or sell put options

• You will buy call options or sell put options

• You will buy call options or buy put options

Futures have 15 months duration and 4 different months of delivery:  March, June, Sept, Dec.

• 3 different futures are traded on this asset at the moment

• 4 different futures are traded on this asset at the moment

• 5 different futures are traded on this asset at the moment

• 6 different futures are traded on this asset at the moment