an_introduction_to_cme_foreign_exchange_products.pdf

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1、AnIntroductiontoCMEForeignExchangeProductsWhatAreFuturesandOptions?Futurescontractsarestandardized,legallybindingagreementstobuyorsellaspecificproductorfinancialinstrumentinthefuture.Thebuyerandsellerofafuturescontractagreeonapricetodayforaproducttobedeliveredorsettledincashatafuture

2、date.Eachcontractspecifiesthequantity,qualityandthetimeandlocationofdeliveryandpayment.Thevalueofafuturescontractisderivedfromanunderlyingfinancialmeasureormarket,suchasforeignexchangerates,equityindexlevels,interestratesorcommodityprices–hencethetermderivatives.Asthevalueoftheunderl

3、yingmeasureormarketchanges,thevalueofthefuturescontractbasedonthatmeasureormarketalsochanges.Institutionsandindividualsthatfacefinancialriskbasedonthemovementoftheunderlyingmeasureormarketcanbuyorsellfuturesthatwillchangeinvaluetooffsetthatfinancialrisk.Suchtransactionsareknownashedg

4、ing.Institutionsandindividualsalsobuyandsellfutureshopingtoprofitfrompricechanges.Thesetransactionsareconsideredspeculation.CMEalsooffersinvestorsoptionsonfutures.Optionscanbethoughtofasinsurancepolicies.Theoptionbuyerpaysapricefortheright–butnottheobligation–tobuyorsellafuturescontr

5、actwithinastatedperiodoftimeatapredeterminedprice.Thecombinationofoptionsandfutures–bothrisk-managementtools–cangivemarketparticipantstheleverageoffuturesandthemorelimitedriskofoptions.Optionsprovidetheopportunitytolimitlosseswhilemaintainingthepossibilityofprofitingfromfavorablechan

6、gesinthefuturesprice.GlobalLeadershipintheFinancialMarketplaceCMEisthelargestandmostdiversefinancialexchangeintheworldfortradingfuturesandoptions–handlingnearly800millioncontractsworthmorethan$460trillioninasingleyear.Foundedin1898,weservetherisk-managementneedsofcustomersaroundthegl

7、obebyofferingthewidestrangeofbenchmarkfinancialproductsavailableonanyexchange,tradedviaourCMEGlobexelectronictradingplatformandonourtradingfloors.Ourinnovativeproductscovermajormarketsegments–includingforeignexchange,interestrates,equities,commoditiesandalternativeinvestmentproducts–

8、andimproveth