Futures Essay

37890 WordsNov 3, 2014152 Pages
AN INTRODUCTION TO F UTURES O PTIONS AND S T U D E N T M A N U A L AN INTRODUCTION TO F UTURES O PTIONS AND 2 Global Leadership in the Financial Marketplace CME is the largest and most diverse financial futures and options exchange in the world - handling over 1 billion futures contracts worth more than $660 trillion in a single year. Founded in 1898, we serve the risk-management needs of customers around the globe by offering the widest range of benchmark financial products available on any exchange, traded via our CME Globex electronic trading platform and on our trading floors. Our innovative products cover major market segments - including interest rates, equities, foreign exchange, commodities and alternative investment products - and improve the way these markets work for customers everywhere. 3 TA B L E O F C O N T E N T S PAGE » CHAPTER 1 THE BIRTH OF FUTURES » CHAPTER 2 1 THE FUTURES MARKETS » CHAPTER 3 14 TRADING VENUES: OPEN OUTCRY & ELECTRONIC TRADE MATCHING » CHAPTER 4 21 TERMINOLOGY AND ORDER TYPES » CHAPTER 5 36 HEDGING AND SPECULATING » CHAPTER 6 49 ARBITRAGE » CHAPTER 7 56 SPREADING » CHAPTER 8 59 FUNDAMENTAL AND TECHNICAL ANALYSIS » CHAPTER 9 68 FUTURES AND EXCHANGE-TRADED OPTIONS ON FUTURES » CHAPTER 10 81 FOLLOWING FUTURES AND OPTIONS PRICES » APPENDIX 88 GLOSSARY THE ART OF HAND SIGNALS CME WEB SITE » ANSWER KEY FOR QUIZZES 93 100 108 110 4 An Introduction to Futures and Options An Introduction to Futures and Options has been prepared by the CME Market Education Department. We hope that this manual will broaden any knowledge you may already have about futures and options or spark an interest in this industry if you have not come into contact with it before now. We also offer a number of other courses,

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