Trader Derivatives

1. TraderDerivatives Simon Brown JustOneLap.com SimonBrown.co.za 13th October 2011

2. Wealth warning • Trading 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.

5. Before you start • System • Risk management • Product knowledge • Realistic expectations • Psychology • Equities

6. Correlation • You want to trade non-correlated assets • BUT confirm the lack of correlation • AND know the product

7. Market Maker • Buying and selling at fair value • Ensures products tracks underlying • Other traders can get in the ‘middle’ of the market maker

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

9. Costs • All costs? • % underlying value • Flat brokerage • Roll over costs?

10. Single Stock (SSF) • Equities • ETF’s

11. Index futures • ALSI • ALMI • DTOP • FINI

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

13. Agri futures • Maize (white and yellow) • Bread milling wheat • Soyabean • Sorghum • Sunflower

14. Commodity futures • Corn • WTI Crude • Copper • Silver • Platinum • Gold • Licensing agreement with CME Group

15. Currency Futures • US $ • Euro • Sterling • Australian $ • All vs. The Rand

16. IDX • Berkshire Hathaway • Apple • Nokia • Shell • Citi • Dell • Rio Tinto

17. Interest rate futures • Bond futures • Jibar futures • Index futures

18. Re-cap • WMD • Know you product • Know yourself

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20. TraderDerivatives Simon Brown JustOneLap.com SimonBrown.co.za 13th October 2011