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Derivatives Career Guide and Counseling
We can help you connect with ministry contacts who can provide more information about derivatives career streams, and who are knowledgeable about current and future hiring needs and derivatives career development in these areas.
Contact us to find out more about derivatives career path, derivatives career planning, derivatives career assessment and derivatives career choices. what derivatives career opportunities may be just around the corner and how you can build a satisfying future.
Question: How do you prepare for a career in derivatives? At the moment, I'm working in Investment Accounting. I do operations work (mostly accounting for bonds, stocks, etc). However, my boss wants me to work with the derivatives team as well. I'll be training for derivatives operations soon. I'm a little nervous since I don't really know much about it and I've heard it's quite complex.
I've taken international finance while I was in college which covered derivatives briefly. What's a good way to prepare for this? What kind of math is invovled with derivatives operations? Any help woudl be appreciated.
Thanks!
Answer: You need to have some understanding of the Black-Scholes mathematical model of Options pricing. Here is some information about it:
http://en.wikipedia.org/wiki/Black-Scholes
You also need to know some practical aspects of Options and Futures. Here are some articles about it:
http://www.investopedia.com/articles/optioninvestor/
Question: Where can I find a chart or table online that displays the derivatives of ketones and alcohols? I am looking for the differenty types of derivatives of ketones an alcohols and the names, m.p., b.p., etc of and which compund they are derived from. Tables like this exist, I have a few in my books, but I need some additional ones from online. They consist of the name of a compound, its b.p. or m.p., and the different types of derivatives for that compund as well as its derivative's m.p. I mainly need it for ketones and alcohols.
Answer: Try Chemdex.
Question: How many stocks or derivatives should a day trader focus on? are day traders focused on a few stocks or derivatives that they feel comfortable with? or are they trading many kinds of stocks or derivatives within a day?
Answer: of course, the maximum is 3 positions. i don't recommend more than that in a day.
Question: What is the difference between implicit differentiation and partial derivatives? and is this true: "partial derivatives"="partial differentiation"?
Answer: Partial differentiation is applied to multivariate functions in which the variable to be differentiated against is explicitly specified, and the differentiation done as if all the other variables are constants. Therefore, the partial derivative of y = x^2*z^2 with respect to x would be 2x*y^2. This function of y is explicit: y appears by itself on one side, all other variables are separate. Some funcitions are implicit, meaning the function itself (y) appears in an equation mixed up with the other variables. Sometimes it is difficult to separate the y out, or when you do you end up with a complex function. In that case implicit differentiation is used. This is better explained in the following article:
http://en.wikipedia.org/wiki/Implicit_differentiation
Yes partial derivatives are the result of partial differentiation.
Question: Which of these derivatives, in your opinion, is best suited to providing protection against weather related? Which of these derivatives, in your opinion, is best suited to providing protection against weather-related risk? Why?
Answer: Weather futures.
Question: How do I sketch a function whose 1st and 2nd derivatives are always negative? I need to draw the graph of the original function, but how do I know the 1st and 2nd derivatives will both be negative?
Answer: The first derivative equates to the slope. So you want a function that is continously sloping downward.
The second deriviate equates to the "concavity" of the function. You want a function that is always concave downward.
Think of something like a gradual rollercoaster hill that goes down steeper and steeper. I can't "draw" it too well but it would look something like this:
---__
.........--
............\
............ \
............. |
.............. |
Edit: I found a better diagram. Look at the picture in the lower left corner.
Question: How many second partial derivatives should there be for a three variable function? How many second partial derivatives should there be for a three variable function?
Answer: Three first derivatives.
f(x,y,z)
∂f/∂x ∂f/∂y,∂f/∂z
In addition, you can also have
∂f/∂x∂y
∂f/∂y∂z
∂f/∂x∂z
Question: How do I draw all the monochlorinated derivatives of cyclopentane that are constitutional isomers? Draw all the monochlorinated derivatives of cyclopentane that are constitutional isomers of one another. To make a monochlorinated derivative of a compound, replace one H atom in the compound with Cl
Answer: It does not matter where on cyclopentane you put the Cl. You will always get 1-chlorocyclopentane or just chlorocyclopentane. This means that all of the C's (and all of the H's) are equivalent to each other.
Question: How are asset trades and dividend payments are related to derivatives? Hi folks,
I need help for the question in the subject? Can you give samples of that question? What other transactions related to derivatives? How are they related to derivates?
Thank you.
Answer: Derivatives are legalized gambling. All derivative trades are asset trades of some sort. I would not trade a derivative if I did not think it had some sort of value to me. Even a worthless derivative will be on the balance sheet as an asset even though its market value can be different then it's notional value. I took an entire semester on these and they are almost impossible to explain.
The asset trades I think you are talking abotu are something simple like an interest rate swap they are very popular probably because they are the easiest to understand. These are the only ones I have actually worked with in real life an dthey are a pain to account for.http://en.wikipedia.org/wiki/Interest_rate_swap
Because they are highly liquid you can account for some as if they were cash. And if your company has high short term assets to liabilities, investors are going to demand a higher dividend if they issue them to bebin with.
Others include ETF's, Futures, Commodities markets, Credit derivatives, Energy derivatives where you more or less contract electricity at a certain price for a certain amount of time. If energy goes up you are making more money by not accounting for electricity at the higher price, but actually getting it at a lower price. Same with fuel. That is how Southwest Airlines has stayed out of bankruptcy, by betting derivatives on fuel going up and maintaining futures contracts at a price higher then what the other Airlines were paying at the time, but that price stayed when fuel prices doubled.
One cause of the current crisis is mortgage related derivatives. And credit default swaps.
If you want to understand them all you are going to have to get a library of books and some private tutors.
Question: Is anyone out there making money trading options derivatives? Is it possible to earn a living doing this? Please only answere if you have actual experiance trading options and derivatives.
What's a good place for me to start learning how to trade?
Can you recomend a specific web site that for option and derivative trading?
I know there is significant amoung of risk involved but the reward is great as well.
Answer: <<>>
I have some profits and some losses trading options, but my profits are greater than my losses.
<<>>
Yes, if you learn enough about it, have enough capital, spend enough time at it, and follow good money and risk management plans. I have never tried to make a living it at since I have always had an adequate income elsewhere.
<<>>
For learning about options I suggest you start with the free tutorials at
http://www.cboe.com/LearnCenter/default.aspx
After that, I suggest you read one or two good books about options trading. Any of the books at
http://www.cboe.com/Institutional/Bibliography.aspx
should be good. My favorites are
McMillan, Lawrence G.: Options as a Strategic Investment, Fourth Edition
Natenberg, Sheldon: Option Volatility and Pricing, Revised Edition
but you should scan as many of these books as you can and pick the one(s) you are comfortable with.
I will also mention that one options author, Mark Wolfinger, is a regular contributer to the Yahoo message board at
http://messages.yahoo.com/Business_%26_Finance/Investments/forumview?bn=4686677
as "dagnyt". (Mark is a former market maker and now is a retail trader.)
If you are interested in his books you can find them at
http://www.mdwoptions.com/
<<>>
You can take as much or as little risk as you want. I think you will find most professional traders usually pick spreads less risky than simple stock positions.
Question: Is a company required to report derivatives, options, mutual funds or hedge funds under FASB 115? According to FASB, debt and equity securities such as long term fixed maturities, treasury bills, and stocks are to be reported under statement of 115. Is the company also required to report derivatives, options, mutual & hedge funds for FASB 115?
Answer: Yes they are.
Question: how derivatives can be used to hedge risk associated with weather and global warming? Describe how derivatives (forward contracts, futures, options and swaps) can be used to hedge risk associated with weather and global warming.
Answer: Weather derivatives are financial instruments that can be used by organizations or individuals as part of a risk management strategy to reduce risk associated with adverse or unexpected weather conditions. The difference from other derivatives is that the underlying asset (rain/temperature/snow) has no direct value to price the weather derivative. Farmers can use weather derivatives to hedge against poor harvests caused by drought or frost; theme parks may want to insure against rainy weekends during peak summer seasons; and gas and power companies may use heating degree days (HDD) or cooling degree days (CDD) contracts to smooth earnings.
Heating degree days are one of the most common types of weather derivative. Typical terms for an HDD contract could be: for the November to March period, for each day where the temperature falls below 18 degrees Celsius keep a cumulative count. Depending upon whether the option is a put option or a call option, pay out a set amount per heating degree day that the actual count differs from the strike.
The first weather derivative deal was in July 1996 when Aquila Energy structured a dual-commodity hedge for Consolidated Edison Co. The transaction involved ConEd's purchase of electric power from Aquila for the month of August. The price of the power was agreed to, but a weather clause was imbedded into the contract. This clause stipulated that Aquila would pay ConEd a rebate if August turned out to be cooler than expected. The measurement of this was referenced to Cooling Degree Days measured at New York City's Central Park weather station. If total CDDs were from 0 to 10% below the expected 320, the company received no discount to the power price, but if total CDDs were 11 to 20% below normal, Con Ed would receive a $16,000 discount. Other discounted levels were worked in for even greater departures from normal.
After that humble beginning, weather derivatives slowly began trading over-the-counter in 1997. As the market for these products grew, the Chicago Mercantile Exchange introduced the first exchange-traded weather futures contracts (and corresponding options), in 1999. The CME currently trades weather derivative contracts for 18 cities in the United States, nine in Europe, six in Canada and two in Japan. Most of these contracts track cooling degree days or heating degree days, but recent additions track frost days in the Netherlands and monthly/seasonal snowfall in Boston and New York. A major early pioneer in weather derivatives was Enron Corporation, through its EnronOnline unit.
Climetrix® Weather Derivative System Launches Seamless Integration With TFS White Board and YellowJacket Software's YJ Weather
Newark, Calif. – July 17, 2006 – Risk Management Solutions (RMS), the world’s leading provider of products and services for the management of natural hazard risk, today released version 5.1 of its Climetrix® weather derivatives trading and portfolio risk management system. This release provides an automated, direct link between Climetrix and the two most important sources of over-the-counter (OTC) weather market data: TFS White Board and YellowJacket Software’s YJ Weather. Climetrix version 5.1 also includes expanded option pricing functionality that automatically identifies the most valuable OTC trades available in the market.
The features added to version 5.1 provide further examples of how Climetrix automates processes that add significant value to a weather trading desk. The new functionality included in Climetrix 5.1 saves traders from performing time-consuming deal entry and also provides automatic notification of any potentially valuable deals posted to TFS White Board or YJ Weather.
Jeff Hamlin, director of Weather Risk Solutions at RMS, comments, “By directly linking Climetrix with the TFS White Board and YellowJacket’s YJ Weather, our clients can instantly price virtually all weather contracts quoted in the OTC market. Details of these OTC markets are automatically loaded into Climetrix and then updated on a real-time basis so traders can spend less time on deal entry and more time trading.”
Climetrix version 5.1 also includes expanded option pricing functionality that instantly calculates the value of any new OTC market relative to recently traded or recently quoted values. This new functionality ranks all existing OTC option markets according to value, allowing clients to focus on the most valuable opportunities available in the OTC market.
More information about Climetrix can be accessed at: http://www.climetrix.com. Climetrix provides integrated access to all of the data, pricing tools, and portfolio management capabilities that are needed to participate successfully in the weather derivatives market.
http://www.marketwatch.com/news/story/growing-futures-market-lets-businesses/story.aspx?guid=%7B40213F1C-4108-4464-859B-47436F68649B%7D
http://www.ubs.com/1/e/media_overview/media_emea/mediareleases?newsId=117789
http://www.indexuniverse.com/index.php?option=com_content&view=article&id=1044&Itemid=38
Question: What are derivatives? Can one trade in right offers on the floor of the Stock Exchange? I want an explanation on stock market derivatives and strategies for growing one's potfolio.
Answer: Derivatives are a variation of stocks.
They are options for many stocks, options and commodities.
They permit the trader to have the right, BUT NOT the obligation to purchase a particular stock, future of commodity at a particular price.
They give traders "more bang for the buck." For about 15% to 20% of the price of the stock, commodity or future, the trader can control 100 shares - 1 contract.
THE BIGGEST CHALLENGE: selecting the right option which gives the trader enough time for the trade to go imn the trader's favor.
The sites: http://investopedia.com - is a free site. It has an excellent easy-to-understand financial dictionary! It also has a Virtual Trading platform. You don't need any money. This is for you to try different strategies, "tweak" your trading rules, sharpen your trading skills and to help relieve you of some of trading's edge - when you decide to go "LIVE" - in the market with your hard-earned money.
http://finance.yahoo.com - another free, great site for getting news and different information you will need.
Both yahoo finance & investopedia are recognized as "Featured Knowledge Partners" of Yahoo! Answers.
Thanks for asking your Q! I enjoyed answering it!
VTY,
Ron Berue
Yes, that is my real last name!
Question: What is the real life meaning of the third and the fourth derivatives? I mean we always talk about only the 1st and the 2nd derivative. I mean we use those two often. But can anyone explain me the real life meaning of the third and fourth derivatives or what actually they represent and helps us to figure out?
Answer: Life – it has a meaning and loving purpose - you just have to find your purpose and live it.
I believe every person is here for a definite purpose. Each person is special and valuable; that refers to me, you, your family, friends, in fact everybody! There is a loving plan for each of our lives here on earth and there is no such thing as coincidence. I don't believe that anything in life happens by chance and that every aspect of our lives points to something deeper.
You need to decide now to live for God rather than for yourself. You spend your life on Earth preparing yourself (as best you can) for death. I don't see death as a scary, negative experience, but birth into a bliss filled eternal life with God. I believe that this is something you have to consciously choose or not during your life on earth.
The meaning of life is for us to discover that we are true children of an infinitely loving and merciful God, to find out what our responsibilities are to our Creator, and to fulfill those responsibilities. Each of us is called to affirm, accept and develop the talents God has given us.
Question: What is the chemical reaction of obtaining salicylic acid and its derivatives? I have been trying to google on this problem..but with little success. I want to know some chemical reactions concerning salicylic acid ( its obtainment and its derivatives ).
Answer: I will answer for the derivatives : Methyl salicylate and Aspirin
(ASA).
In a college organic lab we synthesized the first compound (Methyl salicylate). For the rest of the term my lab note book smelled of oil of wintergreen !
"Methyl salicylate (chemical formula C6H4(OH)COOCH3; also known as salicylic acid methyl ester, oil of wintergreen, betula oil, methyl-2-hydroxybenzoate) is a natural product of many species of plants. Some of the plants producing it are called wintergreens, hence the common name. ...Methyl salicylate can be produced by esterifying salicylic acid with methanol"
"Aspirin also known as acetylsalicylic acid (Abbreviated ASA). . Salicylic acid is treated with acetic anhydride, an acid derivative, causing a chemical reaction that turns salicylic acid's phenol group into an acetyl group, (R-OH → R-OCOCH3). "
Question: How do i find the rate of change and maximum value with derivatives? How do i find the rate of change and maximum value with derivatives?
The voltage , V, in volts, in an electrical outlet is given as a function of time, t, in seconds, by the function
V = 235cos(t x 790 x pi)
Give the expression for the rate of change of voltage with respect to time.
I found the formula to be : 790pi(-235sin(790pit))
But, What is the maximum value of the rate of change?
Answer: Just take the derivative of that and then solve V'' = 0:
V''=d/dt(790pi(-235sin(790pit)))
=-235*(790pi)*(790pi)*(cos(790pit))=0
so cos (790 pi t) = 0 to maximize rate of change
meaning that sin (790 pi t) = -1 (trig identity, negative because we want V' positive)
so max(V')=235*790pi
Hope this helps!
Derivatives Career Information and Opportunities
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Consumer Affairs Ministry not for transaction tax on commodity derivatives
Hindu Business Line
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Reuters
Despite its talk of a global level playing field, the United States is being portrayed as a rogue country, with its unmatched Volcker rule to curtail banks' risky trades and its accelerated timetable to put in place new derivatives reforms.
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INSIGHT-D.Boerse/NYSE deal undone by smart opponents, culture clash
Reuters
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Media news derivatives: Feb. 2
Washington Post (blog)
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DeMarco "Completely Puzzled" Over Derivatives Flap
Forbes
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UBS, Credit Suisse Among Banks in Swiss Libor-Fixing Probe
BusinessWeek
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Washington Post (blog)
By Erik Wemple In case you missed it---How many items can a blogger write about a ?Marketplace? radio feature that turned out to be fabricated? Well, you can do one on the news, another on a cool Web site that raised hell about the situation, ...
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Sydney Morning Herald
The spectacular collapse of MF Global and the release of a consultation paper by the government flagging options to reform the client money laws for over-the-counter (OTC) derivatives could have profound consequences for a number of operators' models ...
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EU Blocks $10 Billion Deutsche Boerse, NYSE Merger
ABC News
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Washington Post (blog)
By Erik Wemple In case you missed it---In a long story this past weekend in the New York Times, a ?portrait emerged? of casino billionaire Sheldon Adelson, the guy who is helping to keep Newt Gingrich's presidential hopes alive.
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