The Mechanics of the Derivatives Markets: What They Are and How They Function
Oil Market Report. SPECIAL SUPPLEMENT
OECD/IEA | Apr. 2011 | ISBN: n/a | 91 pages | PDF | 1 MB

This supplement is designed as a reference document for member governments and subscribers. It forms part of an ongoing work programme examining the mechanics of oil price formation and the interactions between the physical and paper markets. With detail User's Guide and Glossary to the IEA Oil Market Report

TABLE OF CONTENTS
PREFACE
1. INTRODUCTION TO DERIVATIVES
1.1 Basics of Derivatives
1.2 Types of Derivatives
1.3 History of Derivatives Markets
1.4 The Markets
1.5 Types of Market Participants in Derivatives Markets
1.5.1 Hedgers
1.5.2 Speculators
1.5.3 Swap Dealers and Commodity Index Traders
2. FORWARDS AND FUTURES
2.1 Forward Contracts
2.2 Futures
2.2.1 Contract Specifications
Box 1: Grade and Quality Specifications of WTI Contract
2.2.2 The Clearinghouse Margins
2.2.3 Settlement Price, Volume and Open Interest in Futures Markets
2.2.4 Types of Orders
2.3 Hedging Using Futures Contracts
2.4 Basis Risk
3. SWAPS
3.1 Mechanics of Swaps
4. OPTIONS
4.1 Call Option
4.2 Put Option
4.3 "Moneyness" of Options
4.4 Hedging Using Options
5. REFERENCES
6. GLOSSARY OF THE DERIVATIVES MARKET TERMS