This presentation having a case unanticipated delivery of a future contract

1. UNANTICIPATED DELIVERY OF A FUTURES
CONTRACT
Submitted to : Presented By:
Prof. R Srinivasan Vaishali Singh
Vaibhav Agrawal
Balwant Singh

2. Let me tell you a story
Author of book
Senior Executive Of F.I.

3. Story Begins:
• We have appointed a new employee who do not have prior work
experience in Financial Institution.
• Responsibility was given to handle client .
• The client enters regularly into a long futures contract on live cattle
for Hedging Purposes.

4. Result: The employee noted that the client was long one position and instructed the trader in the
exchange to buy(not sell) one contract as a result they ended up with two live cattle futures
contract. By the time mistake was spotted trading in the contract had ceased.

5. Now
• The F.I. started to look into the details of the delivery arrangements.
• Under the contract Cattles would be delivered by the party with short
position to a number of different locations in the United States during
delivery.
• The F.I. received the notice from the exchange in which it was mentioned
that-
1. It would receive live cattle the following Tuesday
2. The distance was 2000 miles away.
3. Location had cattle auction every Tuesday
Bring
the
Cattles

6. Contd..
• The party with short position bought cattle at the auction and delivers
them immediately.
• Unfortunately the cattle cannot be resold until the next auction on
following Tuesday.

7. Now the employee faced the problem for arrangement
Arrange
food for
cattle
Residence