TraderDerivatives

Simon BrownJustOneLap.com

SimonBrown.co.za13th October 2011

Wealth warningTrading derivatives can offer significant returns BUT also subject you to significant losses if the market moves against your position. You may, in a relatively short time, sustain more than a total loss of the funds placed by way of initial margin. You may be required to deposit a substantial additional sum, at short notice, to maintain your margin balance. If you do not maintain your margin balance your position may be closed out at a loss and you will be liable for any resulting deficit.

Before you start

•System•Risk management•Product knowledge•Realistic expectations•Psychology

•Equities

Correlation

•You want to trade non-correlated assets

•BUT confirm the lack of correlation•AND know the product

Market Maker

•Buying and selling at fair value•Ensures products tracks underlying

•Other traders can get in the ‘middle’ of the market maker

Expiry

•Know expiry date•Near dated vs. Further dated?•Does your broker;•close you out?•roll your contract?

Costs

•All costs?•% underlying value•Flat brokerage•Roll over costs?

Single Stock (SSF)

•Equities•ETF’s

Index futures

•ALSI•ALMI•DTOP•FINI

Options

•Warrants•Index (including barrier)•Equities•Currency•Commodity•Instalments•Equity

Agri futures

•Maize (white and yellow)•Bread milling wheat•Soyabean•Sorghum•Sunflower

Commodity futures

•Corn•WTI Crude•Copper•Silver•Platinum•Gold

Licensing agreement with CME Group

Currency Futures

•US $•Euro•Sterling•Australian $

All vs. The Rand

IDX

•Berkshire Hathaway•Apple•Nokia•Shell•Citi•Dell•Rio Tinto

Interest rate futures

•Bond futures•Jibar futures•Index futures

Re-cap

•WMD•Know you product•Know yourself

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TraderDerivatives

Simon BrownJustOneLap.com

SimonBrown.co.za13th October 2011