$600 Trillion??

[FXsKaLpEr]

Quote from dgabriel:

The 600 trillion figure was the amount traded on the CME in 2004.

It depends on how the contract is structured and how delivery is performed, either the underlying assett or cash.

You buy an option to sell a futures contract on pork bellies. That option, if exercised, has to be matched with the contract and delivery.

Most options, and probably most derivatives expire worthless.

I have a friend who trades derivatives for a bank. I'll ask him for further details.

thanks, Dgabriel, right on.

If they are all OTC they cannot be daytraded?

but I thought you could trade OTC more actively.

perhaps not 30-trades a day, but it doesn't mean you cannot 'actively' trade DVs, right?

also, when you say the "amount," do you mean the volume?

because forex is supposed to be the biggest market at $2t a day.

 

[SethArb]

too tired to do the math here but I do not think the numbers are so high in this link

www.occ.treas.gov/toolkit/newsrelease.aspx?Doc=MC44FU0H.xml

however ...

-The 25 largest banks account for more than 99 percent of the total notional amount of derivatives._ Five commercial banks account for 96 percent of the total.-

here is another link of interest ...

www.occ.treas.gov/toolkit/newsrelease.aspx?Doc=2HUO7PYF.xml

 

[dont]

Quote from TheStudent:

It's a meaningless figure since it is based on $600 trillion of underlying asset value.

It has no meaning on the potential exposure of the market : If I sell puts on $1mm of IBM, I buy calls on $1mm of IBM at the same strike - we get $2mm of derivatives. But really it's the same exposure as being long only $1mm of IBM.

Exactly and a lot of OTC derivatives are nonsense trades to get around tax or some other regulation, just convenient to call them derivatives and it makes the structuring bank look clever. I question how many credit derivatives are real in the sense that they payoff in the event of a default.

 

[mind]

whoever here gets in panickMood and running for otm puts ... this thing has been discussed over a decade now ... so enough time for a coffee ... but then again ...