Options, futures and other derivatives
6th edition by John Hull
1. Preface
Like a forward contract, a futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future for a certain price. Unlike forward contracts, futures contracts are normally traded on exchange (Forward contracts are traded in over-the-counter market). Options are traded both on exchanges and in the over-the-counter market.
Three broad categories of traders can be identified: hedgers, speculators and arbitrageurs. A hedge fund is similar to a mutual fund in that it invests funds on behalf of clients. However, unlike mutual funds, hedge funds are not required to regiester under US federal securities law.
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