derivative instruments

Question

Provide a description of one put option written on a stock and one futures contract written on foreign exchange rate. Both of the derivatives must be contracts currently traded in Borsa Istanbul, and you should provide all the details (including size, initial margin etc).

Answer 1

Put Option on Stock

1. Underlying Asset: Akbank (AKBNK)
2. Option Class: Put
3. Exercise Style: European
4. Contract Size: 100 shares of AKBNK
5. Tick Size: 0.01 TL
6. Contract Months: September 2023, October 2023, November 2023
7. Settlement Method: Cash settlement
8. Trading Hours: 9:00 AM - 4:30 PM
9. Settlement Period: T+2
10. Daily Settlement Price: Calculated based on the time-weighted average of the last 30 minutes of continuous auction in the equity market and the closing price of the underlying stock
11. Expiry Date: Third Friday of the contract month
12. Last Trading Day: Two business days prior to the expiry date
13. Strike Prices: 100 TL, 105 TL, 110 TL, etc.
14. Daily Price Limit: 10% of the strike price
15. Initial Margin: 10% of the option premium

Example:

An investor buys a put option on AKBNK with a strike price of 105 TL and an expiry date of September 2023. The option premium is 5 TL per share. The investor's initial margin requirement is 10% of the option premium, which is 0.5 TL per share.

If the spot price of AKBNK falls below 105 TL on the expiry date, the investor can exercise the option and sell 100 shares of AKBNK at 105 TL per share. This would result in a profit of 10 TL per share (105 TL - spot price) minus the option premium of 5 TL per share.

Futures Contract on Foreign Exchange Rate

1. Underlying Asset: USD/TRY exchange rate
2. Contract Size: 100,000 USD
3. Tick Size: 0.0001 USD/TRY
4. Contract Months: September 2023, October 2023, November 2023
5. Settlement Method: Physical delivery
6. Trading Hours: 9:00 AM - 4:30 PM
7. Settlement Period: T+2
8. Daily Settlement Price: Calculated based on the closing price of the underlying asset on the previous day
9. Expiry Date: Third Friday of the contract month
10. Last Trading Day: Two business days prior to the expiry date
11. Initial Margin: 10% of the contract value

Example:

An investor buys a futures contract on USD/TRY with a contract size of 100,000 USD and an expiry date of September 2023. The spot price of USD/TRY is 17.00 TL. The investor's initial margin requirement is 10% of the contract value, which is 170,000 TL.

If the spot price of USD/TRY rises above 17.00 TL on the expiry date, the investor can sell the futures contract at a profit. The profit would be the difference between the spot price on the expiry date and the contract price, minus the initial margin.

Please note that these are just examples, and the actual details of the derivatives may vary depending on the specific contract.