Derivatives

What are Futures

A futures contract is essentially a standardised forward contract, except that the deal is made through an organised and regulated exchange rather than being negotiated directly between two parties. In a Physically Delivered Contract one side agrees to deliver a commodity or asset on a future date (or within a Read more…

Derivatives

What are Forwards

A forward contract is made directly between two parties. In a physically delivered forward contract one party agrees to buy an underlying commodity or financial asset on a future date at an agreed fixed price. The other party agrees to deliver that item at the stipulated price. Both sides are Read more…

Derivatives

What are Swaps

A swap is an agreement made between two parties to exchange payments on regular future dates, where each payment leg is calculated on a different basis. For example, suppose that a US company has to make interest payments on a euro loan over the next five years. Unfortunately its income Read more…