There are many kinds of futures contracts related to finance. At present, there are three varieties that have been developed:
(1) Interest rate futures refer to futures contracts with interest rates as the subject matter. The earliest interest rate futures in the world are the mortgage-backed futures of the National Mortgage Association of the United States launched by Chicago Mercantile Exchange 1975. Interest rate futures mainly include long-term interest rate futures with long-term treasury bonds as the subject matter and short-term interest rate futures with two-month short-term deposit rates as the subject matter.
(2) Currency futures refer to futures contracts with exchange rates as the subject matter. Currency futures are produced to meet the needs of foreign trade and financial business in various countries and to avoid exchange rate risks. 1972, the international money market of Chicago Mercantile Exchange launched the first currency futures contract, which was successful. After that. Britain, Australia and other countries have successively established currency futures trading markets, and currency futures trading has become a worldwide trading variety. At present, the currencies involved in the international currency futures contract exchange mainly include British pound, US dollar, German mark, Japanese yen, Swiss franc, Canadian dollar, French franc, Australian dollar and European monetary unit.
(3) Stock index futures refer to futures contracts with the stock index as the subject matter. Stock index futures are the hottest and fastest-growing futures trading in the financial futures market. Stock index futures do not involve the delivery of the stock itself, its price is calculated according to the stock index, and the contract is delivered in the form of cash settlement.
Create background
The so-called financial futures refers to futures contracts with financial instruments as the subject matter. Financial futures trading refers to the trading mode in which traders conduct transactions through public bidding on a specific exchange and promise to buy or sell a certain amount of certain financial commodities at a pre-agreed price on a specific date or period in the future. Financial futures trading has the general characteristics of futures trading, but compared with commodity futures, its contract subject matter is not physical goods, but financial goods, such as foreign exchange, bonds, stock indexes and so on.
The prices of basic financial commodities are mainly expressed in the form of exchange rate and interest rate. Various complex financial commodities in the financial market have become the source of financial risks. All kinds of financial institutions, while innovating financial instruments, have also produced objective requirements to avoid financial risks. In the early 1970s, the collapse of the fixed exchange rate system in the foreign exchange market increased the financial risk unprecedentedly, and directly induced the emergence of financial futures.
1In July 1944, 44 countries held a meeting in Bretton Woods, New Hampshire, USA, and established the Bretton Woods system, which implemented a double-linked fixed exchange rate system, that is, the US dollar was directly linked to gold, and other countries' currencies were linked to the US dollar at a fixed price. The establishment of the Bretton Woods system has played an important role in the economic recovery and growth of post-war western European countries and the development of international trade. At the same time, under the fixed exchange rate system, the exchange rate fluctuation among currencies is limited to a very limited range (1% currency parity), and the foreign exchange risk is almost ignored, so the demand for foreign exchange risk management is naturally small.
Since 1950s, especially after 1960s, with the economic recovery of western European countries, their holdings of US dollars have increased day by day, and their local currencies have also become stronger. However, the United States launched wars against North Korea and Vietnam one after another, resulting in huge trade deficits year after year, deteriorating balance of payments and high inflation, which led to a large outflow of gold and frequent dollar crisis of selling dollars.
In August 197 15, the United States announced the implementation of the "new economic policy" and stopped fulfilling its obligation to exchange dollars for gold. In order to save the near-collapsed fixed exchange rate system, at the end of February of the same year, the G-10 signed the Smithsonian Institution agreement in Washington, USA, announcing that the dollar depreciated by 7.89% against gold, and the fluctuation range of various currencies against the dollar was expanded to 2.25% of the currency parity. 1in February, 973, the United States announced that the dollar would depreciate again 10%. The further depreciation of the dollar failed to stop the continuation of the dollar crisis. Finally, in March 1973, the foreign exchange markets in western Europe and Japan were forced to close 17 days later, major western countries reached an agreement and began to implement a floating exchange rate system.
Under the floating exchange rate system, the exchange rate between currencies directly reflects the imbalance of economic development among countries, which is reflected in the frequent and violent fluctuations of exchange rates between currencies in the international financial market, and the foreign exchange risk increases rapidly compared with that under the fixed exchange rate system. The holders of all kinds of financial commodities are facing the increasingly serious threat of foreign exchange risks, and the demand for avoiding risks is increasingly strong. The market urgently needs a convenient and effective tool to guard against foreign exchange risks. In this context, foreign exchange futures came into being.
1972 in may, the Chicago mercantile exchange established the international money market department and launched the forex futures trading. At that time, foreign exchange futures contracts were all quoted in dollars, and there were seven kinds of currencies, namely, British pound, Canadian dollar, German mark, Japanese yen, Swiss franc, Mexican peso and Italian lira. Later, the exchange adjusted the contract according to market demand, and stopped the trading of Italian lira and Mexican peso successively, and added futures contracts of Dutch guilder, French franc and Australian dollar. Following the successful launch of forex futures trading in the international money market, exchanges in the United States and other countries followed suit and launched their own foreign exchange futures contracts, which greatly enriched the trading varieties of foreign exchange futures and triggered innovations in other financial futures. 1975 10, Chicago futures exchange launched the first interest rate futures contract-gnma mortgage certificate futures trading; 1982, Kansas futures exchange (KCBT) launched the value line composite index futures trading, which marked the initial formation of three types of financial futures.
At present, there are dozens of active financial futures contracts in major financial futures markets around the world. According to the nature of various contract targets, financial futures can be divided into three categories: foreign exchange futures, interest rate futures and stock index futures, among which the most influential contract is CBOT's long-term US Treasury bond futures contract. The 90-day European yen futures contract of Tokyo International Financial Futures Exchange (TIFFE) and the Hang Seng Index futures contract of Hong Kong Futures Exchange (HKFE).
Financial futures has only a short history of more than 20 years, far less than commodity futures, but its development speed is much faster than commodity futures. At present, financial futures trading has become one of the main contents of the financial market. In many important financial markets, the trading volume of financial futures even exceeds the trading volume of its basic financial products. With the development of global financial markets, financial futures are increasingly characterized by internationalization, and the interaction of major global financial futures markets is enhanced and the competition is becoming increasingly fierce.
Economic function and its influencing factors
Financial futures market has many economic functions, among which the most basic function is to avoid risks and find prices.
(A) to avoid risks
Since 1970s, frequent and large fluctuations in exchange rate and interest rate have aggravated the inherent risks of financial commodities. Facing the increasingly extensive wave of financial liberalization, investors objectively demand to avoid a series of financial risks such as interest rate risk, exchange rate risk and stock price fluctuation risk. The establishment and development of financial futures market is to meet this demand. Therefore, avoiding risks is the primary function of the financial futures market.
By purchasing relevant financial futures contracts, investors set up positions in the financial futures market that are opposite to those in the spot market, and according to different market conditions, hedge their positions or execute delivery before the futures contracts expire to avoid risks.
From the perspective of the whole financial futures market, there are three main reasons why its hedging function can be realized: First, many physical financial commodity holders face different risks, and the overall risk of the market can be controlled by reaching favorable transactions. For example, importers are worried about the rise of foreign exchange rate, while exporters are worried about the fall of foreign exchange rate, so they can hedge their risks by making a reverse forex futures trading. Secondly, the futures price and spot price of financial commodities generally change in the same direction. After an investor establishes a position in the financial futures market that is opposite to the financial spot market, when the price of financial commodities changes, it is bound to gain in one market and lose in the other, and its profit and loss can be offset in whole or in part, thus achieving the purpose of avoiding risks. Thirdly, the financial futures market has concentrated many speculators who are willing to take risks and make profits through standardized floor trading. Through frequent and rapid trading hedging, they transferred the price risk of the holders of physical financial commodities, thus realizing the hedging function of the financial futures market.
(2) Find the price
The discovery price function of financial futures market means that financial futures market can provide effective price information of various financial commodities.
In the financial futures market, there are many buyers and sellers of various financial futures contracts. They set the transaction price in a way similar to auction. This situation is close to a perfectly competitive market, which can reflect investors' expectations of financial commodity price trends and financial commodity supply and demand to a certain extent. Therefore, the transaction price of financial futures contracts can comprehensively reflect the influence of various factors in the financial market on the underlying commodities, which is characterized by openness and transparency.
Due to the development of modern electronic communication technology, the prices of major financial futures can generally be broadcast to all parts of the world in real time. Therefore, the price formed in the financial futures market not only plays a direct guiding role for all kinds of investors in the market, but also provides useful reference information for other related markets besides the financial futures market. Professional investors and physical financial commodity holders in relevant markets can form reasonable expectations of financial commodity prices by referring to the transaction prices in the financial futures market, and then arrange investment decisions and production and operation decisions in a planned way, which is helpful to reduce information search costs, improve transaction efficiency and realize fair and reasonable competition with equal opportunities.
The main factors affecting financial futures are: national economic growth, money supply, inflation rate, balance of payments, national monetary, fiscal and foreign exchange policies, international reserves, psychological factors and so on.
When we analyze the development trend of a particular kind of financial futures, we should make flexible judgments based on the above situation.
The difference between financial futures and commodity futures
The most important thing is the holding cost, that is, the cost of holding the futures subject matter until the futures contract expires, including three items:
1. Custody expenses: including expenses for keeping the subject matter and insurance expenses;
2. Transportation cost;
3. Financing cost: the opportunity cost of purchasing the subject matter funds.
All kinds of goods need to be stored, and storage costs are needed. The subject matter of financial futures, whether bonds, stocks or foreign currencies, requires low storage costs, and some, such as stock index futures, do not even need storage costs. In addition, the subject matter of these financial futures not only has low storage cost, but also generates interest if it is stored in financial institutions, such as stock dividends, bond interest and foreign currency interest. Sometimes these interests will exceed the storage cost and generate holding interests. Another big cost of general commodities relative to financial commodities is transportation cost. For example, transporting corn from Iowa to Chicago is significantly higher than the remittance fee of foreign currency or bonds, and some, such as stock indexes, don't even need freight.
Main varieties and trading places
There are three kinds of financial futures: currency futures, interest rate futures and index futures. The varieties listed on the exchanges mainly include:
Currency futures: futures contracts of Australian dollar, British pound, Canadian dollar, German mark, French franc, Japanese yen, Swiss franc, Eurodollar and European monetary unit.
Main trading places: Chicago Mercantile Exchange International Money Market Branch, China-US Mercantile Exchange, Philadelphia Futures Exchange, etc.
2. Interest rate futures: short-term US Treasury futures, medium-term US Treasury futures, long-term US Treasury futures, municipal bonds, mortgage-backed securities, etc.
Main trading places: Chicago Board of Trade, International Money Market Department of Chicago Mercantile Exchange, China-US Commodity Exchange.
3. Stock index futures: Standard & Poor's 500, NYCE Composite Index of new york Stock Exchange, MMI and Value Line Composite Index, in addition to NIKI of Japan and Hang Seng Index of Hong Kong (Hong Kong Futures Exchange).
Main trading places: Chicago Board of Trade, Chicago Mercantile Exchange, new york Stock Exchange and Kansas City Futures Exchange.
Trading volume and growth rate of the world's seven major financial futures exchanges
Exchange name, growth rate of trading volume (thousands of dollars)
1988 1989 (%)
Chicago Board of Trade
Chicago Mercantile Exchange
Tokyo Stock Exchange 20607 27644 34%
France International Business Exchange 16580 26002 57%
London International Financial Futures Exchange 15546 223859 53%
Osaka Stock Exchange 2433 12053 395%
Sydney Futures Exchange 77091182153%
What are the factors that affect the price of financial futures?
1, general price level The general price level and its change data are important information to show the overall economic vitality, and also a substitute indicator to reflect the degree of inflationary pressure. Generally speaking, inflation is closely related to the change of interest rate, which will also affect the government's monetary policy and change the medium and long-term capital situation in the market. Specifically, it affects the level of return on investment of investors or traders. Therefore, participants in securities, even futures and options markets must pay close attention to the changes of inflation indicators.
2. The government's monetary policy and fiscal policy In the example of the United States, his monetary policy was formulated by the Federal Reserve Board and implemented through the Federal Reserve banking system. Since the Federal Reserve Board can control the circulation and growth of money by monitoring M 1 and M2 and using the rediscount rate, its policy orientation and measures will have a great impact on the interest rate level.
3. The government's general market intervention measures In order to achieve the purpose of its monetary management, the central bank or the US Federal Reserve can temporarily change the supply of circulating funds in the market in other ways besides having the ability to control the currency circulation by relaxing or tightening the monetary policy. Therefore, traders in the futures market should not only observe the influence of policy measures on money and even general financial commodities, but also master and understand the intervention measures taken by the Federal Reserve or other central banks in the open market, so as to make a more correct judgment on the possible price fluctuations in the spot and futures markets of financial commodities.
4. Industrial activities and related economic indicators Industrial activities are related to the supply of all commodities and also affect the flow of market funds. Generally speaking, the prosperity of industrial activities and the increasing demand for commercial funds and loans will contribute to the rise of interest rates; With the decline of industrial activities, the demand for commercial loans and funds has decreased, and interest rates have also fallen. Therefore, government agencies pay close attention to the changes in industrial activities and issue various reports on industrial economic activities as the basis for implementing economic policies; Private organizations and market participants collect these data and reports as the basis of economic and financial forecasts.
Different meanings of financial futures
Financial futures mainly refers to the trading of stock prices or interest rates-two parties sign a contract to buy and sell bonds or stocks on an agreed date in the future.
Overview of financial options
Financial options are financial derivatives based on options.
Financial option refers to option trading with financial commodities or financial futures contracts as the subject matter. Specifically, after paying a certain fee to the seller, the buyer has the right to buy or sell a certain number of financial commodities or financial futures contracts from the seller at a certain price within a specified time.
Financial option is a contract that gives its buyers the right to buy or sell a certain amount of certain financial assets (called basic financial assets, or the underlying assets, such as stocks, foreign currencies, short-term and long-term government bonds, foreign currency futures contracts, stock index futures contracts, etc.). ) within the prescribed time limit, the transaction is made at the price agreed by both parties (hereinafter referred to as the transaction price or exercise price).
[Edit this paragraph] The formation and development of financial options?
/kloc-in the 0 ~ (th) century, the stock price of British South Sea Company soared, and the stock option market also developed. After the collapse of south sea bubble, stock options were once banned from trading for more than 65,438+000 years, because they were regarded as symbols of speculation, corruption and fraud. The early option contract was introduced to the United States in the 1990s from 65438 to 2008, when the new york Stock Exchange was just established. /kloc-In the late 9th century, Russell Sage, known as the "father of modern option trading", organized a trading system of call and put options in the OTC market, and introduced the concepts of call and put parity. However, due to the non-standardization, non-transferability, physical delivery and unsecured option contracts, the OTC market has developed very slowly.
1On April 26th, 973, the Chicago Board Options Exchange (CBOE) was established and began to call trading, which marked the standardization of option contracts and options trading. In the mid-1970s, American Stock Exchange (AMEX), Philadelphia Stock Exchange (PHLX) and Pacific Stock Exchange successively launched option trading, which made the option get unprecedented development. 1977, put right transaction begins. At the same time, Chicago Board Options Exchange began to explore the trading of non-stock options.
From 65438 to 0982, CME started S&; P 500 option trading marks the birth of stock index options. In the same year, the Chicago Board Options Exchange launched the US Treasury option trading for the first time, which became the beginning of interest rate option trading. At the same time of 1982, foreign exchange options came into being, which first appeared on the Montreal Exchange (me) in Canada. In February of 65438+, the Philadelphia Stock Exchange also began to trade foreign exchange options. 1984 foreign exchange futures options were staged in the international money market (IMM) of Chicago Mercantile Exchange. Subsequently, futures options quickly expanded to European dollar deposits, 90-day short-term and long-term government bonds, domestic deposit certificates and other debt securities futures, as well as gold futures and stock index futures, and almost all futures had corresponding options trading. ?
In addition, a new army "exotic options" appeared in the wave of financial innovation in 1980s, and its appearance was particularly eye-catching. "New" means that such options are different from the past and the structure is "strange". Some options are added with options, while others contain special terms in terms of expiration date, agreed price, trading and so on. Due to the complex structure and difficult pricing, the market demand began to decrease. Since 1990s, this trend has been greatly weakened. In the 1990s, there was another trend in the development of financial options, that is, there were more and more compounds between options and other financial instruments, such as "hybridization" with corporate bonds and mortgage-backed bonds, compounding with various equity certificates and combining with insurance products, forming a new category of financial options products. ?
[Edit this paragraph] Types of financial options
Financial options traded on the floor mainly include stock options, interest rate options and foreign exchange options. Stock options are similar to stock futures, mainly including stock options and stock index options. Stock options are options derived from a single stock, and stock index options are mainly divided into two types. One is the stock index futures option derived from stock index futures, such as the Nikkei 225 index option traded on the Singapore Stock Exchange, which is derived from the Nikkei 225 index futures traded on the Singapore Stock Exchange; The other is the spot option derived from the stock index, such as the Nikkei 225 index option of Osaka Stock Exchange, which is derived from the Nikkei 225 index. The execution results of the two stock index options are different. The former obtains the futures contract, and the latter settles the cash difference.
[Edit this paragraph] The difference between financial options and financial futures
1, different themes
The targets of financial options and financial futures are different. Generally speaking, all financial commodities that can be traded in futures can be traded in options. However, financial products that can be traded as options cannot be traded as futures. In practice, there are only financial futures options, but not financial options futures, that is, there are only financial options transactions with financial futures contracts as the subject matter, and there are no financial futures transactions with financial options contracts as the subject matter. Generally speaking, the subject matter of financial options is more than financial futures.
With the development of financial options, its subject matter tends to increase. Many things that cannot be traded in financial futures can be used as the subject matter of financial options, and even the financial option contract itself has become the subject matter of financial options, which is the so-called compound option.
2. The symmetry of investors' rights and obligations is different.
The rights and obligations of both parties in financial futures trading are symmetrical, that is, for either party, there are both rights and obligations to be performed by the other party. However, in the transaction of financial options, there is obvious asymmetry between the rights and obligations of both parties. The buyer of the option has only rights but no obligations, and the seller of the option has only obligations but no rights.
3. Different performance guarantees
Both sides of financial futures trading need to open a margin account and pay the performance bond as required. In the transaction of financial options, only the option seller, especially the seller of unsecured options, needs to open a margin account and pay the margin according to the regulations to ensure the fulfillment of obligations. For the option purchaser, because option contracts has not agreed on his obligations, he doesn't need to open a margin account, so he doesn't need to pay any margin.
4. Different cash flows
There is no cash receipt and payment relationship between the two parties in financial futures trading, but after trading, due to the daily settlement system, both parties will generate cash flow due to price changes, that is, the balance of the margin account of the profit party will increase, while the balance of the margin account of the loss party will decrease. When the balance of the loss-making margin account is lower than the prescribed maintenance margin, the additional margin must be paid in time according to the regulations. Therefore, both sides of financial futures trading must maintain certain highly liquid assets in case of emergency.
In financial option trading, the option buyer must pay a certain option fee to the option seller in order to obtain the rights granted by option contracts; However, after the transaction, there is no cash flow between the two parties except the due performance.
5. The characteristics of profit and loss are different.
Neither side of the financial futures trading has the right to breach the contract or require early delivery or delayed delivery, and can only hedge through reverse trading at any time before the expiration or make physical delivery at the expiration. However, before hedging or due delivery, price changes will inevitably make one party profitable and the other party lose money, and the degree of its profit or loss depends on the extent of price changes. Therefore, theoretically speaking, the potential gains and losses of both sides of financial futures trading are infinite.
On the contrary, in financial options trading, because of the asymmetry of rights and obligations of options buyers and sellers, their profits and losses in trading are also asymmetric. Theoretically speaking, the potential loss of the option buyer in the transaction is limited, limited to the option fee paid, but the possible profit is unlimited; On the contrary, the profit of the option seller in the transaction is limited, limited to the option fee charged, but the possible loss is infinite. Of course, in the real option trading, because the option contract is rarely executed, the option seller is not always at a disadvantage.
6. The function and effect of hedging are different.
Financial options and financial futures are common hedging tools, but their functions and functions are different.
People use financial futures to hedge, while avoiding the losses caused by unfavorable price changes, they must also give up the benefits that may be obtained by favorable price changes. People use financial options to hedge, and if the price changes adversely, the hedger can avoid losses by exercising options; If the price changes favorably, the hedger can protect the interest by giving up the option. In this way, through financial option trading, we can not only avoid the losses caused by unfavorable price changes, but also retain the benefits brought by favorable price changes to a considerable extent.
However, this does not mean that financial options are more favorable than financial futures. This is because, from the perspective of hedging, financial futures are usually more effective and cheaper than financial options, and it is not easy to really hedge and make profits in financial options trading.
So financial options and financial futures can be said to have their own advantages and disadvantages. In real trading activities, people often combine them to achieve a specific purpose through a certain combination or collocation.