Trading in FCPO contracts allows investors or traders to hedge their investments and diversify the investment portfolios into a derivative instrument. Traders who enter into FCPO contracts typically aim to profit from the contracts traded or to hedge against losses in the crude palm oil market.
The first module of this course provides participants
with an understanding of the mechanics of FCPO trading and explains how to
trade (buying and selling) FCPO contracts and determine the fair value of the
contract. The next module provides participants with scenarios and
examples of risk and return analysis in FCPO trading. Margin requirements for
trading FCPO contracts will also be covered in this module.
Upon completion of this module, the participants will be able
to:
1.
describe how to trade an FCPO
contract.
2.
identify the general
principles of buying and selling of FCPO contracts.
3.
calculate the fair value of
an FCPO contract.
4.
calculate the profit and loss
from trading FCPO contracts utilising various scenarios.
5.
explain the function and
importance of initial and variation margins.
Trading in Crude Palm Oil Futures Contract (FCPO)
