Gold Futures

Ch.17

AFN= (A*/S0)ΔS – (L*/S0) ΔS – M(S1)(RR)

A* = Asset directly to sales

S0 = Sales of previous year

Ds = Sales of next year – last year

L* = Liability that change directly to sales

M = Profit margin

S1 = next year sales

RR = Retention rate

Ch.18 Risk management

1. Risk Identification Internal VS External,

Strategic Financial Operation Compliance

(SFOU)

2. Risk Analysis: likelihood = chance of

occurring, Impact = amount of money expect

to lose when chance occur

3. Risk Management

– Acceptance – Green zone = let it go

- Reduction – Diversify, not focus only 1 thing

- Avoidance – Consider risk and avoid it. Reject the project

|Buyer |Buy |Buy |

|Long/buy |Call option |Put option |

| |ซื้อสิทธิ์ในการซื้อ |ซื้อสิทธิ์ในการขาย |

|Seller |Sell |Sell |

|Sell/write |Call option |Put option |

| |ขายสิทธิ์ในการซื้อ |ขายสิทธิ์ในการขาย|

- Transfer – Insurance, Derivative

4. Risk evaluating

Call option = Right to buy

Put option = Right to sell

Exercise = Price

Option price – Market price

Who buy Call option = transfer risk (buy insurance)

Who sell Call option = accept risk (insurance company)

Ex. Buy Call option – right to buy ABC stock at $100, the cost of option is $10

If stock price = 120 - option profit = 0, cost =10 so net profit = $10

If stock price = 80 – Option profit = 0 (not buy), cost = 10 so net loss = $10

Buy Put option – right to sell stock at $10

If stock price = 120, option profit = 0, cost = 10 so net loss = $10

If stock price = 80 – Option profit = 20, cost = 10 so net profit = $10

|Sell |10,000 |12,000 |14,000 |

|Profit/loss |2,000 |- |-2,000 |

|Mkt price |10,000 |12,000 |14,000 |

|Selling price |12,000 |12,000 |12,000 |

|Buy |25,000 |26,000 |27,000 |

|Dec 2011 Gold | | | |

|price...