Course Title: Futures & Forwards Trading
Course Description: This comprehensive course on Futures & Forwards Trading is designed to equip participants with a deep understanding of derivative financial instruments, focusing on their use in hedging and speculative activities. The course covers essential concepts such as market dynamics, advanced hedging techniques, interest rate benchmarks, and practical trading strategies. Through a combination of theoretical knowledge and real-world examples, participants will develop the skills needed to navigate and succeed in the futures and forwards markets.
Duration: 10 weeks
Format: Online lectures, case studies, interactive exercises, and quizzes
Target Audience:
- Financial professionals
- Traders and investors
- Risk managers
- Finance students
- Anyone interested in learning about futures and forwards trading
Learning Objectives
By the end of this course, participants will be able to:
- Understand the Fundamentals of Futures and Forwards:
- Define futures and forwards contracts and explain their key differences.
- Describe the standard specifications of futures contracts, including unit of trading, delivery months, and pricing mechanisms.
- Apply the concept of cost of carry to determine futures prices.
- Analyze Market Dynamics and Basis:
- Define basis and explain its importance in hedging.
- Differentiate between contango and backwardation market conditions.
- Calculate basis and understand its impact on hedging outcomes.
- Implement Advanced Hedging Techniques:
- Calculate hedge ratios and apply them to manage exposure using futures contracts.
- Understand and calculate the Basis Point Value (BPV) to measure bond price sensitivity.
- Develop strategies to hedge the Cheapest-to-Deliver (CTD) bonds using futures contracts.
- Navigate LIBOR Alternatives and Interest Rate Hedging:
- Understand the transition from LIBOR to alternative benchmark rates like ESTR, SOFR, and SONIA.
- Calculate and apply ESTR rates for financial transactions.
- Develop and implement interest rate hedging strategies using ESTR-indexed futures.
- Execute Spread Trading and Arbitrage Strategies:
- Understand and implement inter-contract and intra-contract spread trading strategies.
- Identify and exploit cash and carry arbitrage opportunities.
- Analyze real-world scenarios and execute effective trading strategies based on spread trading and arbitrage principles.
- Apply Practical Knowledge through Interactive Exercises:
- Engage in real-world case studies and practical exercises to reinforce theoretical knowledge.
- Calculate profits and losses from various trading strategies and hedging techniques.
- Use quizzes and assessments to test understanding and mastery of course material.
Course Outline
- Fundamentals of Futures and Forwards:
- Introduction to futures and forwards
- Futures contract specifications
- Pricing mechanisms and cost of carry
- Market Dynamics and Basis:
- Understanding basis
- Market conditions: contango and backwardation
- Basis hedging strategies
- Advanced Hedging Techniques:
- Hedging with futures: hedge ratio calculation
- Basis Point Value (BPV)
- Hedging Cheapest-to-Deliver (CTD) bonds
- LIBOR Alternatives and Interest Rate Hedging:
- Introduction to LIBOR alternatives: ESTR, SOFR, SONIA
- ESTR overview and calculations
- Interest rate hedging strategies
- Spread Trading and Arbitrage:
- Spread trading with futures: inter-contract and intra-contract spreads
- Cash and carry arbitrage
- Practical trading examples and case studies
By completing this course, participants will gain a robust understanding of futures and forwards trading, equipping them with the skills and knowledge needed to effectively manage risk, optimize investment strategies, and capitalize on market opportunities.
