The following instructions is from the professor “directly”.
If you do NOT have an idea of the subject, please do NOT write this paper.
the main source of this paper is
you are required to write Step#1 & 2 Only for this order. I will make another order for Step No.3 later. I will assign it to you if you completed the previous steps
Here are the instructions:
Derivative Instruments and Markets
***Directions for research report
Purpose of the paper: The main purpose of this report is to make sure that students understand the process of how the FUTURES MARKET works in a hands-on way. Each
student will chose an asset => Foreign Exchange EUR/USD. On July 07, 2014, each student will open up an account with the CBOT-CME for 5 contracts in their chosen
assets and will track, on a daily basis, the status of their accounts. During this time, if they receive a margin call, they will meet the call and continue to hold
their positions until July 30, 2014.
The individual steps will include the following:
ASSET CHOSEN : EUR/USD
Main Source : http://www.cmegroup.com/trading/fx/g10/euro-fx.html
*** Step #1: Current Outlook: (2 pages)
• For the asset chosen (EUR/USD), the student will have to write up a report on the current outlook on EUR/USD. This will include any expectations, observations or
trends that they may find from different sources. (Do you think Euro is going to be appreciate/depreciate against USD? Why)
• This is necessary because this will determine whether they are going to be in a long or a short contract.
• Essentially they will be acting as “student speculators” and depending on what outlook they present, they will put a logic why they want to be on the buying (Long
Contract) or selling (Short Contract) side of the contract.
• This step is the “heart of the project” and as such it will have 40% of their grade. A maximum of three pages (including any graphs, bibliography, pictures etc.) is
allowed for this part of the project.
*** Step #2: Contract specifications: (1 Page)
• For the asset chosen (EUR/USD), the students will detail the specifications of their individual contracts. This will include, but NOT limited to, the size of the
contract, the dates and the settlement procedure.
• They also have to present some highlights of the “delivery procedure”. For example, the grade of the asset, the location of the delivery, etc.
• I expect these to be written by the students themselves instead of just copying and pasting from the web site.
• This will not exceed one page. This report is responsible for 20% of the grade.
Step #3: Daily settlement: (In another order IF you do the previous two Steps perfectly)
Following what has been shown in class, the students will create an excel sheet where they will record daily closing prices for all business days during July 07 to
July 30, 2014. This sheet will also show the changes in prices, changes in balance and margin calls, if any. Essentially, the 4 line example that was shown in the
class has to be replicated for these days. There is no easy way to get historical data for futures prices and thus students will have to make sure they collect the
daily data every week day after 5 PM. This sheet will also include notes by the students on any significant movements in prices and what he/she thinks about this
movement. This is necessary because they are acting as speculators and they need to understand the movements. After July 30, they have to make some comments as to what
their expectation was on July 07 and how it played out in the futures market. All these should be in the same Excel file where they show their daily settlements. This
report is responsible for 40% of the grade and will have to be e-mailed to the instructor by noon of July 31, 2014.