Derivatives

CGS International Securities (Thailand) Co., Ltd. provides brokerage services for Futures and Derivatives products, both through professional dealers and online trading on online.cgsi.co.th with a comprehensive trading platform and real time information.

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What are Derivatives?

Derivatives are financial instruments or financial contracts that have unique characteristics in that their value is derived from the value of the underlying asset. The maturity date will have an impact on the value of the derivatives as they approach their date of maturity.

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There are 2 types of derivatives traded on the Thailand Futures Exchange (TFEX) - "Futures" and "Options"

• The person obligated to buy an underlying asset will hold a "Long Position"
• The person obligated to sell an underlying asset will hold a "Short Position"

Futures are contracts in which two parties are obligated to buy/sell an underlying asset on the date of maturity, according to an agreement.

In the derivatives market, investors must deposit a minimum amount which is called the initial margin. Normally, this deposit is less than the money required to buy an underlying asset.

Benefits of investing in Derivatives products
- Possible to have an investment strategy that could benefit both in a market upturn and downturn - To hedge risk - To leverage investment - investors may spend less of their own funds for an investment. This is high-risk investment, as while high profits are possible, so are high losses.

Note before trading
- You should monitor your investment portfolio regularly - Margin call could be triggered

Options is a contract that gives buyer the right, but not the obligation, to buy or sell at a specific number and price as stipulated in the contract. The right will be exercised by the options buyer who has the right to decide whether to exercise it or not. If the buyer chooses to exercise, the seller must give the buyer the right as agreed. Buyer has to pay a certain amount of money to the seller in return for an options to redeem the rights under the contract. This amount of money is called "Premium". There are 2 types of options ; Call Options and Put Options.

	Call options	Put options
Buyer (Long Position)	Has the right to "BUY" at a specific number and price as stipulated in the contract.	Has the right to "SELL" at a specific number and price as stipulated in the contract.
Seller (Short Position)	Has the obligation to "SELL" at a specific number and price if the buyer wants to exercise.	Has the obligation to "BUY" at a specific number and price if the buyer wants to exercise.