Ses 10: Forward and Futures Contracts II & Options I

MIT 15.401 Finance Theory I, Fall 2008
View the complete course: ocw.mit.edu/15-...
Instructor: Andrew Lo
License: Creative Commons BY-NC-SA
More information at ocw.mit.edu/terms
More courses at ocw.mit.edu

[@DY-uy3rx]

From 2020: yes, those future contracts can even go negative.....

[@RaylinRecords]

true

[@jitheshdsouza98]

How?

[@DY-uy3rx]

@@jitheshdsouza98 WTI future oil contract once turned negative in May 2020. Simply put, too many speculators bought the contracts and can't get rid of it, so they have to sell last minute at all cost.

[@hl3641]

Lol…

[@hl3641]

50:16 it’s easy to sell 25% if u own SP500 index etf is trading selling 500 individuals stocks by weights or using Future with friction , so why didn’t he promote the etf solution? Active manager bias

[@MrBish435]

Prof Lo is an Amazing lecturer! Thank you so much, MIT for making these recordings available!

[@Katana_00]

1:02:50 start of Options talk

[@HuongDuong-kk4op]

Thank you

[@nikolai228]

Thanks

[@berkandemir5407]

Legendary lecturer

[@NazriB]

Lies again? Fujitsu laptop

[@b09a321]

@@NazriB is

[@sudhirpatil3434]

I haven't come across a better teacher in all my life- hats off to his capability to make complicated stuff simple-

[@arrowb3408]

So which uni did you attend or none above?

[@kingmoreorless2810]

@@arrowb3408 76ers 7777777

[@OG-NASA]

touche

[@Chillnote]

Better than the course in my college

[@arrowb3408]

I should do the home work from this lecture before jumping in the Market. Hahaha... Should Have... damn

[@NoName-vw7wf]

Just watching now. I remember getting my fisrt margin call back in the day.

[@qwertytechnology]

I am halfway through this course, and I can't help but be enthralled by Prof Lo's oratory. Thank you MIT OCW for offering this gem for free.

[@brainstormingsharing1309]

Absolutely well done and definitely keep it up!!! 👍👍👍👍👍

[@enisten]

12:30 This is not exactly true, though, right? Futures contract only eliminates the risk arising from the difference between the original futures price and the spot price at settlement. The buyer still has to pay the spot price during delivery, and the seller still has to have the goods to deliver.

[@frederickhofmann843]

I think it is true, because futures contracts are so standardized, not even really between two people anymore, most people who trade them do not really care about selling or using wheat

[@bganbesfien]

I will be very intrested to understand what financial projects Andrew Lo is working on for the world, or to a lesser extend in America coming through 2016/17. HAppy New Year Professor! - Comments@Taiwan

[@gyuyu6243]

kzbin.info/www/bejne/f6ikaKGMetykqtE

[@solo.99]

Very well explained and a great teacher!

[@ricardomurillo5205]

This is great. If he only used the board a bit more to see the math better....

[@wiambenhammou9942]

Amazing professor!

[@johnstfleur3987]

" ABSOLUTELY INTELLIGENTLY MOST HUMBLY SPEAKING OF COURSE I AM PROFESSOR JESUS CHRIST OF THE RESSURECTION OF COURSE FROM HEAVEN."(ALIEN CORONA KING 19 OF COURSE)(V-BUDDHA AS IKE'S RESURRECTION OF COURSE)(JC)

[@constantinacotsopoulou711]

I am thinking of a contract where I am payed back in materials like clothes ,hoes,sampoos ,food supllements,food ,shoes,gazoline ,bike insurance,bike repairs ,body care ,hair care ,facial care and some euros 24 every year all these for the amount of investment of 960 euros .in the lectures it sais that many companies are closing down and there fore they can pay their denbts in goods ,there they could find all these ,i am particularly interested in quality its ok if the brands are USA not European ,what do you think?

[@bruceb85]

Constantina Cotsopoulou what are you saying

[@Doctor_NO]

Could any smart guys answer my question? Dr.Lo talked about the futures on presidential election in Iowa. However, most forward and futures are based on ASSETS. I could not see any relevance between presidential election and asset. "Futures on presidential election" looks more like a gamble on football games to me.

[@arrowb3408]

So true for what A.L said about commodity of gold, it's the simple for retirees to manage- just SIT AND THE RISING RATE. ..........STF..................

[@JesusChrist-d2k]

"THE JOKER IS BEING RESURRECTED NOW STEP BY STEP AS SENKU I SAY IT."GENIUS"(14)

[@MoonBull13]

I'm convinced he's saying "fucktuation" and that's final!

[@jpan4438]

If nobody chooses physical delivery, where are the cattle then? How do the farmers benefit?

[@weebgrinder-AIArtistPro]

Not sure tbh but maybe they benefit as futures prices influence current or spot prices.

[@jpan4438]

@@weebgrinder-AIArtistPro Maybe at expiration the sellers "cancel" the order and sell the animals to the actual market? Not sure if the estimated price would be precise then.

[@weebgrinder-AIArtistPro]

@@jpan4438 Me neither. There must be books about futures that answer questions like this. I would hope.

[@PhiNguyen-iz9go]

I think there are people who really buy these cattle (physical), like restaurants, they will put money at settle day and the farmers get benefit from it. Other who just want to make a bet, they will cancel the contract (by selling an exact same contract) in some day before the settle day.

[@jpan4438]

@@PhiNguyen-iz9go But what if the betting stimulates the cattle supply, so that in the end there are too few restaurants that are willing to accept the beef?

[@mrhandyhandssr7839]

Amazing lecture. One might say……. Kinky

[@mauroguedes9603]

Excellent.

[@TheYi1985]

Excellent!

[@TheShironiji]

The sample MIDTERM exam and solution are not corresponding to each other (it seem that sample midterm exam is from 15.407 whereas solution is from 15.401). Could you please reupload it again.

[@C8yti]

34:47

[@neelmoradiya1389]

🇮🇳🇮🇳🙏🙏👍👍

[@TheJiminiflix]

This is Kevin from the Office 😁

[@leonarsoboneschi]

brilliant lecture, by a brilliant lecturer

[@blueshadow1996]

This is interesting,,

[@whatsup7184]

Hahaha... Happened to see a grandeur house in GA in the same name as Low. Hahaha.. . Anyway, coming here to finish this section of the class-- the main purpose instead of that famous American. Hahaha..

[@johnstfleur3987]

"TELOS."(ONE)

[@gabrysoprano8907]

Options are at 60:03

[@RaylinRecords]

35:44 power of stocks. Gold can pay dividends : ) American Barrick : )

[@srijankiller]

Nice

[@arrowb3408]

OMG... this future contract is no different from any gambling table in casino at all to bet on anything you name it including the Pesident election. It's not hard to imagine myself as the Tom Sawyer in his class to bet anything as long as the cash amid it..:)......STF.......

[@vasudilwal9356]

dude at 1:04 walked out or in?

[@seanmartin4790]

In

[@arrowb3408]

Hahaha... this is the biblical protocol I learned other than my other professional field. Very useful for both apply in my life. Hahaha... Love this.........STF......

[@bruceb85]

40,000lb of cattle are about 40 cows at 1000 lbs per cow. They refer to them as heads (because they cut there heads off) so 40 heads is 40,000lb, or 1 contract.

[@irvinarce5852]

as a student this is quality, as a trader this is only 50% excellent. the same problem all introductory material about options have: nobody talks about selling options they only talk about buying options.

[@kautilykrishanpandey9283]

Can you please provide some videos which deals with options..

[@mattm1634]

+irvin arce This is a first year course.

[@robin212212]

@Manuj Madan i think you may mean market making in options, which involves both selling and buying of options and making profits from the bid ask spread.

[@ShivamGupta-zh5fe]

If my margin is 5%, and the price of index falls by 10% in a day, and I don't have money to add to the margin account, can Future Clearing Corporation (or any other institution) recover the rest 5% from my personal assets?

[@suppandi1000]

Yes

[@RedCandleWax24]

Don’t keep your assets in your name. Use a legal entity to shelter.

[@angelbaby.7897]

Lol kinky XD

[@azswaggastupid]

Where is the $250 coming from?