Certified Futures Trader

VS-1137
Certified Futures Trader
www.vskills.in


C CC Certified ertified ertified ertified Futures Trader Futures Trader Futures Trader Futures Trader
Certification Code Certification Code Certification Code Certification Code VS-1137
Vskills certification for Futures Trader assesses the candidate as per the companys need
for options and futures trading. The certification tests the candidates on arious areas in
futures markets !asics" Va#" pricing of futures contracts" inestment assets" stochastic
interest rates" hedging" short-term interest rate futures" t-!ills" long-term interest rate futures"
foreign e$change futures and stock inde$ futures.

%hy shou %hy shou %hy shou %hy should one take this certification& ld one take this certification& ld one take this certification& ld one take this certification&
This Course is intended for professionals and graduates 'anting to e$cel in their chosen
areas. (t is also 'ell suited for those 'ho are already 'orking and 'ould like to take
certification for further career progression.

)arning Vskills Futures Trader Certification can help candidate differentiate in today*s
competitie +o! market" !roaden their employment opportunities !y displaying their
adanced skills" and result in higher earning potential.

%ho 'ill !enefit from taki %ho 'ill !enefit from taki %ho 'ill !enefit from taki %ho 'ill !enefit from taking this certification& ng this certification& ng this certification& ng this certification&
,o! seekers looking to find employment in options and futures trading departments of
arious companies" students generally 'anting to improe their skill set and make their CV
stronger and e$isting employees looking for a !etter role can proe their employers the
alue of their skills through this certification.
Test -etails Test -etails Test -etails Test -etails
-uration. -uration. -uration. -uration. /0 minutes
1o. of 2uestions. 1o. of 2uestions. 1o. of 2uestions. 1o. of 2uestions. 30
4a$imum marks. 4a$imum marks. 4a$imum marks. 4a$imum marks. 30" 5assing marks. 63 73089
There is no negatie marking in this module.
Fee Structure Fee Structure Fee Structure Fee Structure
#s. 3"000:- 7(ncludes all ta$es9
Companies that hire Vskills Companies that hire Vskills Companies that hire Vskills Companies that hire Vskills Certified Futures Trader Certified Futures Trader Certified Futures Trader Certified Futures Trader
Futures Traders are in great demand. Companies speciali;ing in options and futures
trading are constantly hiring skilled Futures Traders. Various pu!lic and priate companies
also need Futures Traders for their options and futures trading departments.





Certified Futures Trader
www.vskills.in

Ta!le of Contents Ta!le of Contents Ta!le of Contents Ta!le of Contents

1. 1. 1. 1. (ntroduction (ntroduction (ntroduction (ntroduction
1.1 Forward Contracts versus Futures Contracts
1.2 Type of Assets Underlying Futures Contracts
1.3 Futures Exchanges
1.4 Types of Assets Underlying Options Contracts
1.5 Options Exchanges
1.6 Hedgers, Speculators, and Arbitrageurs
1.7 The Role of Futures and Options Markets
1.8 Reasons for the Rapid Growth of Derivative Markets
1.9 The Recent Indian Story in Derivatives
1.10 Electronic Exchanges: The State-of-the-Art

6. 6. 6. 6. Fundamentals of Futures 4ark Fundamentals of Futures 4ark Fundamentals of Futures 4ark Fundamentals of Futures 4arkets ets ets ets
2.1 Standardization of Futures Contracts
2.2 Margins and Marking to Market: General Principles
2.3 Spot-Futures Convergence at Expiration
2.4 Trading: General Principles
2.5 Value at Risk (VaR)
2.6 VaR in the Context of Futures Trading in India
2.7 Types of Members and the Margining System in India
2.8 Types of Orders
2.9 Liquidating a Futures Position
2.10 Trading Volume versus Open Interest
2.11 Conversion Factors When There are Multiple Deliverable Grades
2.12 Single Stock Futures

3. 3. 3. 3. 5ricing of Futures Contracts 5ricing of Futures Contracts 5ricing of Futures Contracts 5ricing of Futures Contracts
3.1 Notation
3.2 Assumptions
3.3 Forward Contract on a Security That Provides No Income
3.4 Forward Contracts on Assets That Provide a Known Dividend Yield
3.5 Forward Contracts on Commodities
3.6 Investment Assets
3.7 Consumption Assets
3.8 Calendar Spreads and Arbitrage
3.9 Net Carry
3.10 'Backwardation' and 'Contango'
3.11 Delivery Options
3.12 Imperfect Markets
3.13 Synthetic Securities
3.14 Forward Price versus Futures Prices
3.15 Stochastic Interest Rates
3.16 Quasi- Arbitrage
Certified Futures Trader
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3.17 Risk and Futures Prices

<. <. <. <. =edging =edging =edging =edging
4.1 A Selling Hedge
4.2 A Buying Hedge
4.3 Lifting a Hedge Prior to the Expiration of the Futures Contract
4.4 Basis Risk
4.5 Selecting a Futures Contract
4.6 A Rolling Hedge
4.7 The Hedge Ratio
4.8 Estimating the Hedge Ratio
4.9 Tailing a Hedge
4.10 Quantity Uncertainty
4.11 Rationale for Hedging
4.12 Hedging Processing Margins
4.13 Developing Derivative Exchanges Key Issues

3. 3. 3. 3. Short Short Short Short - -- -Term (nterest #ate Futures Term (nterest #ate Futures Term (nterest #ate Futures Term (nterest #ate Futures
5.1 Eurodollars
5.2 T-bills
5.3 Yields
5.4 T-bill Futures
5.5 The No-Arbitrage Pricing Condition
5.6 Risk Management Using T-bill Futures
5.7 Shortening T-bill Maturities
5.8 Lengthening T-bill Maturities
5.9 Risk Management Using Chained Hedge Ratios
5.10 Introduction to Eurodollar Futures
5.11 Calculating Profits and Losses on ED Futures
5.12 Bundles and Packs
5.13 Locking in a Borrowing Rate
5.14 Cash and Carry Arbitrage
5.15 Reverse Cash and Carry Arbitrage
5.16 The No-Arbitrage Pricing Equation
5.17 Hedging Rates for Periods Not Equal to 90 Days
5.18 Creating a Fixed Rate Loan
5.19 Strip versus Stack Hedges
5.20 The TED Spread

/. /. /. /. >ong >ong >ong >ong- -- -Term (nterest #ate Futures Term (nterest #ate Futures Term (nterest #ate Futures Term (nterest #ate Futures
6.1 Fundamentals of Bond Valuation
6.2 Duration
6.3 The Cash Market
6.4 The Futures Market
6.5 Conversion Factors
6.6 Calculating the Invoice Price for a T-bond
Certified Futures Trader
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6.7 The Cheapest to Deliver Bond
6.8 Arbitrage or Risk Arbitrage?
6.9 Seller's Options
6.10 Hedging

7. 7. 7. 7. Foreign )$change Futures Foreign )$change Futures Foreign )$change Futures Foreign )$change Futures
7.1 Purchase and Sale
7.2 The Spot Market
7.3 Arbitrage
7.4 The Forward Market
7.5 Merchant Rates and Exchange Margins
7.6 The No-Arbitrage Forward Price
7.7 One Way Arbitrage
7.8 The Relationship Between Interest Rate Parity and One-Way Arbitrage
7.9 Options Forwards
7.10 Modification of Forward Contracts
7.11 Futures Markets
7.12 Hedging an Export Transaction
7.13 Hedging an Import Transaction
7.14 Creating Synthetic Investments
7.15 Borrowing Funds Abroad
7.16 Creating Synthetic Futures Contracts
7.17 Creating Synthetic Futures Contracts
7.18 Creating Synthetic Short-Term Interest Rate Contracts
7.19 Forward Covered Interest Arbitrage

?. ?. ?. ?. Stock (nde$ Futures Stock (nde$ Futures Stock (nde$ Futures Stock (nde$ Futures
8.1 Price Weighted Indices
8.2 Value Weighted Indices
8.3 Equally Weighted Indices
8.4 Forming Portfolios to Mimic an Index
8.5 Portfolio Re-Balancing
8.6 Re-balancing an Equally Weighted Portfolio
8.7 Changing the Base Period Capitulation
8.8 Pricing of Index Futures
8.9 Cash and Carry Arbitrage
8.10 Reverse Cash and Carry Arbitrage
8.11 The No-Arbitrage Equation
8.12 Index Arbitrage and Programme Trading
8.13 Hedging with Index Futures
8.14 Market Timing with Index Futures
8.15 Using Index Futures to Change the Beta of a Portfolio
8.16 Stock Picking
8.17 Portfolio Insurance
8.18 Index Futures and Stock Market Volatility
8.19 Index Futures in India

Certified Futures Trader
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Sample @uestions Sample @uestions Sample @uestions Sample @uestions
1. 1. 1. 1. The price that the !uyer of a call option pays The price that the !uyer of a call option pays The price that the !uyer of a call option pays The price that the !uyer of a call option pays to ac2uire the option is called the to ac2uire the option is called the to ac2uire the option is called the to ac2uire the option is called the
A. e$ercise price
B. e$ecution price
C. premium
-. 1one of the a!oe

6 66 6. . . . The price that the !uyer of a call option pays for the underlying asset if she The price that the !uyer of a call option pays for the underlying asset if she The price that the !uyer of a call option pays for the underlying asset if she The price that the !uyer of a call option pays for the underlying asset if she
e$ecutes her option is called the e$ecutes her option is called the e$ecutes her option is called the e$ecutes her option is called the
A. strike price
B. e$ecution price
C. All of the a!oe
-. 1one of the a!oe

3 33 3. . . . The price that the 'riter of a put option receies for the underlying asset if the The price that the 'riter of a put option receies for the underlying asset if the The price that the 'riter of a put option receies for the underlying asset if the The price that the 'riter of a put option receies for the underlying asset if the
option is e$ercised is called the option is e$ercised is called the option is e$ercised is called the option is e$ercised is called the
A. strike price
B. e$ecution price
C. All of the a!oe
-. 1one of the a!oe

< << <. . . . All else e2u All else e2u All else e2u All else e2ual" call option alues are lo'er al" call option alues are lo'er al" call option alues are lo'er al" call option alues are lo'er
A. in the month of 4ay.
B. for lo' diidend payout policies.
C. for high diidend payout policies
-. 1one of the a!oe

3 33 3. . . . A put option on a stock is said to !e out of the money if A put option on a stock is said to !e out of the money if A put option on a stock is said to !e out of the money if A put option on a stock is said to !e out of the money if
A. the e$ercise price is higher than the stock price.
B. the e$ercise price is less than the stock price.
C. the e$ercise price is e2ual to the stock price.
-. 1one of the a!oe


Answers: 1 (C), 2 (A), 3 (D), 4 (C), 5 (B)