Quantitative Analysis and Investors Research Paper

Open, View, and/or
Download this Document

Total Length: 686 words ( 2 double-spaced pages)

Total Sources: 2

Page 1 of 2

Derivative Market

Derivatives are defined as the investment products derived from or dependent on the underlying assets. The derivatives are the contracts between two or more parties with reference to the underlying assets, and its value depends on the fluctuations of the assets. Most common type of underlying assets are bonds, stocks, currencies, commodities, market indexes, and interest rates.

The objective of this paper is to explore the concept derivatives and evaluate the future markets and options markets.

Advantages and disadvantages of the Futures Markets and Options Markets

Future markets and options markets are the derivatives instruments that derive their values from instruments or assets. Both options and futures have their advantages and disadvantages. An advantage of an option contract is its ability to provide buyers or sellers the right to buy or sell a financial instrument or asset at a fixed price. The method assists buyers to limit their maximum risks to the premium paid. Moreover, options assist investors to gain access to many underlying assets in an inexpensive way without buying the stocks. Moreover, options assist in limiting losses. The disadvantage is that when the option contract expires, they may be worthless. Moreover, a diversification of stocks may not eliminate the systematic risks in the option contract.

Stuck Writing Your "Quantitative Analysis and Investors" Research Paper?

View All Our Example Quantitative Analysis and Investors Research Paper

Have A Custom Example Essay Written

(John, 2011).

The advantage of future is that it is one of the great ways to trade some investments such as indexes, currencies, and commodities. The standardize features and high levels of leverages features of future options make them very useful for risk tolerance investors. High level of liquidity is another benefit of future contracts. Their liquidity is often remarked in the traded currencies, commodities and index. A major disadvantage of a future contract is that the leverage can carry high risks because of fluctuation of contract values. Lack of control over a future event is another disadvantage.

2. Differences between "Long" or "Short" Position.

In term of stocks, a short option is a position of investors who owe shares while the long position is the investors who owned shares. For example, an investor who owns 500 shares of a particular stock is said to have 500 long shares is trading in long option since this investor has paid the full costs before owning these shares. However, an investor who sells shares of a particular stock without owning these shares is trading in short option. A long position is….....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Quantitative Analysis And Investors" (2016, September 14) Retrieved June 5, 2026, from
https://www.aceyourpaper.com/essays/quantitative-analysis-investors-2162243

Latest MLA Format (8th edition)

Copy Reference
"Quantitative Analysis And Investors" 14 September 2016. Web.5 June. 2026. <
https://www.aceyourpaper.com/essays/quantitative-analysis-investors-2162243>

Latest Chicago Format (16th edition)

Copy Reference
"Quantitative Analysis And Investors", 14 September 2016, Accessed.5 June. 2026,
https://www.aceyourpaper.com/essays/quantitative-analysis-investors-2162243
   

Open, View, and/or
Download this Document
order custom essay example