Using the Futures Market

Instructional time 4-6 hours; multimedia time: 47 minute

This course looks at the practical uses of the futures market for producers and consumers. Although the perspective is not that of a speculator, this module will bring a rounded understanding of the "what" and "why" of futures markets to both speculators and hedgers.

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Outline, objectives & contents

Chapter 1
- Learning Objectives
  - To discuss the origins of commodity futures markets
  - To discuss the specifications for futures contracts
- Contents
  - Managing Price Risk
  - Forward Cash Contracts
  - Start of Commodity Exchanges
  - Contract Specifications
  - Summary
  - Quiz
Chapter 2
- Learning Objectives
  - To explore the concepts of hedging
  - To demonstrate the three steps in hedging
- Contents
  - Definition of Hedging
  - Futures vs. Forward Contracts
  - Establishing a Price Objective
  - Selecting a Futures Delivery Month
  - Local Expected Hedge Price
  - Short Hedging Using Hogs
  - Estimating Basis
  - Establishing a Hedge
  - Forecasting Basis Accurately
  - Summary
  - Quiz
Chapter 3

Learning Objectives
- Discuss the impact of basis risk on hedging
- To Discuss some of the criticisms of hedging
Contents
- Examining Basis Risk
- Coping with Basis Risk
- Impact of Increasing Cash Prices
- Criticism of Hedging
- Summary
- Quiz

Chapter 4
- Learning Objectives
  - To illustrate how to use a hedge from a buyer's point of view
- Contents
  - Long Hedging Using Corn
  - A Complete Hedge
  - To Hedge or Not to Hedge
  - Summary
  - Quiz
Chapter 5
- Learning Objectives
  - To examine the role of the speculator in the futures markets
- Contents
  - Role of the Speculator
  - Speculators Assume Price Risk
  - Summary
  - Quiz
Chapter 6
- Learning Objectives
  - Discuss the role of trading range in the futures markets
  - To discuss the mechanics of margins in futures trading
  - To discuss the importance of financing in heading
- Contents
  - Trading Ranges
  - Margins
  - Financing a Hedge
Conclusion
- Summary
- Quiz
- Conclusion

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An Interactive Learning CDRom from Keystone Marketing Services

An Interactive Learning CDRom
from Keystone Marketing Services