Discover and read the best of Twitter Threads about #derivatives

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#Options vs #Futures

Although both are #derivatives, Futures and Options are entirely different in terms of their potential #risk and #return , #leverage and how they work.

How different are futures and options?
#Rights vs #Obligations

In #Futures Trading, both the buyer & the seller are #obligated to settle the contracts on or before expiry ie cover shorts or longs or rollover to next contract, regardless of how the underlying asset price moves.
With #Options the buyer has the #Right, but not the #Obligation, to buy (call option) or sell (put option) on underlying asset. The option seller is #passive and must comply with whatever the option buyer does.
Read 13 tweets
#Option #Greeks Simplified

#Options are definitely more complicated than equity or futures.

Their prices don’t just go up and down.

They also fluctuate based on things like #time, #implied #volatility and #underlying stock movements.
#Options #Greeks Are Simply Mathematical Shortforms

Most of you would remember from school that mathematical formulas sometimes were #Greek letters like Pi and #Delta. The same is true for options.

Don’t let them overwhelm you or scare you.
They’re simply #mathematical words to explain some very basic principles.

#Greeks Describe the Behavior of #Individual #Options

Each #greek can help predict how it will behave under different circumstances and how options prices would change.
Read 22 tweets
1. In the past months I am often asked what I think of the #DeutscheBank's notional #derivative exposure, which as of Dec 31 2018, according to the bank's annual report, stood at a terrifying €43.5trillion (compare the German annual #GDP of €3 trillion).
Info @tbgstephen #Banks
2. To make it more real: The annual #GDP in the #EU is just €14.6 trillion per year, so the #DeutscheBank's derivative exposure is almost 3 times larger!
3. Reality is that the total in #DeutscheBank's report represents positions both long and short positons including hedging transactions.

#Banks #EU
Read 10 tweets

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