‘AGEME] NTORTHE Caprray MARKET. _C.CEOCEA Financial Invesiment Sociery(S) Notdong oo beled in such « mumer tnt he nase 0m es ee ne IY en eect cect ree Pel iminaed and characterized as an assem ; ly of systematic relat Because these relations have a permanent shan wy ees ad they ae created beeen bors adem ice The mule sshdescbo incr magpenieh a eh Sgpteatic Fk. The nxt dgram sows he ssc te risks. lassification of the [element inside the unsysteratic risks category isthe price risk. The risk in the fact that price variations brings losses to the tans jons participants: when the price goes up, thee are losses for the long ‘when the price go low, there are losses for the short position’s ‘main advantage is that it can easily be recognized because he appears he market, On the market, the price has the following forms: open, clos, nimum, average, target price, spot market price ofthe basic commodity or derivatives exercise price, actual operation conditions of an efficient market theory, based on = movement, the prices are following a directional, determined ‘to be carrying through time (drift rae) and a temporary fluctuation ‘suffered consolidations and regains following the natural ow of negative effects can be counteracted in @ relevant measure by usit a fi forthe derivatives price and futures price : move i ‘between them is ae a cores wt te ven ene this indicator shows Fa ine period mde i ia some poi, te stations because of the eases:44 changes th nd the basis price systematic Market's Operational fering othe dvatives contracts (fures and onions) hee vie at take place on the elemen ‘The 5th international Conference on Management of 7 , ts that determine the Exchange Risk Inflation Risk of the ing Vida Pie Interest rate Market's mechanisms Risks Payment system and clearing’s Rig Contamination Volatility Risk en by the investors according to his forecast and interes! # 1¢ investors i sar spice on wh te sane Seda SS ee eS ona okey teelrabenten deeapatmreton Seen fnctes forthe pte so ie cence ee Ao eect wer ecm coments, the a eed he cents @ Gc evel represent th rument’s + a t when the demand should rally up to this \< I : ' Mate price Mies pesicipants have theee goals according tothe stratesies they choo'e E uicion or edging, when they try to minimize the effect of the price movement Hester postin been athe Dts, when, from a neutral postion towards the risk, the investor tkes _ Mastage of the tempo ‘unbalances of the market's prices Gpetlaten, when tncy create. and strengthen » postion in order 10 obtain ee res movement. imo consideration the fact that the accesso pic an sone fiosncal Geoplinond nc int to invesion applies corey he fendancnsl 206 — practice can provide the next procedures which can be used by 2 preven for an efficient investment portfolio management eA sets polion synckoninnion wth the ezonomic, CY = wg, He securities type and class (support and resistance levels); Set os07 orders Frataeses ins four types of derivatives contracts which he ean use separately ot ination: forward, futures, options and swaPs rat's circunstane depending oY Je and. the 3s, in whieh, if nr opening mute Imanagement contains a varity of inves Securiies oF in case of futures transactions,rie sth International Conference on Management of Tein 416 act strategies assigned to reduce the losses cs a Sed by this risk t, "igh Ug g such as: bility thatthe price declines, and as a case-tO-case resolution thei, hy Peter the eet through a sling sion order or by opeing a ong ye sith options or trading simultaneously a put contract (adjoint put) iting When opening a short sale, the trader’s risk is the price’ increasing ang be when ots los bya stop order ora long cal option; is in a long forward position, the contract's performance risk is mana, futures contract or a long call option; = in a shor forward position, the covtra futures contract ora short call option; = the futures contracts can be covered only in case of delivery and not forthe dsj Variations too, thereby the responsibility of the performance taken on along futur, is managed through a short put option contract, and in case of a short futures y+ ong call option. eI bY & hog performance risk is managed by jp, Using futures and options contracts in risk management An important role the capital market carries out is the possibility it has of offering the dispersal and taking over the risks” effects by a large number of traders, al this by issuing and transsctions of the derivatives. This activity leads to derivatives matka development, which are elaborated, issued and negotiated through specialized qualified financial institutions — the stocks and commodities exchange. Another eapitsl market function is the mobilizstion of the capital fiom a large number of individuals in order to create the aggregate capital needed for tke Investments, by establishing and developing the mutual and retiring funds, known 1s managed mutual investment systems. The open derivatives, traded on the capital market are known as futures and optiots contracts, Risk and turnover when investing in futures contracis Futures contrac isan open derivative transferable security which gives the trade. une determined point in the future, the right of buying or selling a security or a 1? decanttles aamed besis, through a personal system of price assessment and muta! Assumption of market and credit risk, Soreet’s open character leads to continuous changing of the traders during seveat to thatthe positive or negative effects of price movement will be distibued® th ee capital market’s devices, Which the fist mre? tHe traders bind to respect two categories of obligations, f® y's dares tHe enforcement of a buyingrseling coma! 1 ¢ 2 ure dite named dat 88 delivery or exercise price named furs ®t la, OF, otherwise ee ety date, moment when the final compensstic® Obligation is vss, PAY Ment and ttadition of the contract's oad Tose, Measured wand commitment ofthe partners to cover the dil MH, * market's reference price dynamic, through # & vale 9a Stmsfenble secarts, the contract's volume ca 50, er * number, based on stated standard quantities. No matwhich takes adjustment place on cl using the last reference price; commodities transactions is the acto ion when, if physic eceps the contract's eject dene. pn i nocd) ct, and the seller makes the delivery blag ee ame procedure app xh premium, gives the buyer the right, bt not the oblission 0 bu y, named basis, at a specific price during a specified time period. Ts the contact leads to continuous changes ofthe traders during theo ‘or negative effects of price movement will be distr buted oh capital market's devices. g different types of options contracts leads 10 & ‘combination of the ¢! ssa result, some rights and obligations add up but they balasc STRATEGIES DEPENDING ‘ON PRICE TREND al market, the investor's strategy depends on bis pemms forecasted price course, according to which be opens up. No matter what his goa is onthe real marks ty or commodity, the protection of his postion = a= ind that is why globally, the strategies used repre st . ansferable se 1 transactions of the classical ms contra ogether with futures and cPtos o eFave been built up sanded ST esto the poss js the investor wm? 2 in bigger increasethe seh Intemational Conference on Mangement f 7 8. Jy the case when the price’s increase is = den ci onary wie to achieve the contract's object (stock) iz i cover a short position time or he will have to a eat. ing with physical com te Gal ide comer inte fire, and te weal market affects negatively his profit; he covers against the ‘with a price strategy called long hedge. a ‘Beedes buying o call option which is in 2 potential 3 strategies also includes: ~ selling short at-the-money put is a strategy that o: income on the premium size, in case the market's price w bear and the possibility of unlimited risk, in case the marker’ ‘up, situating itself over the exercise price; = adjoint put or covered at-the-money put purchase is the contract's object and the securement of & long pos same long put contract's object, ~ a bay call spread is the buying of a eall contract at a pri sale of another call contract, The investor covers a limite balance of the premiums and a maxim limited earings, ey between the two exercise prices, minus the premiums balan ~ a sell put spread consists in buying a put contract at a pric sale of another put contract. This strategy limits the loss whic premiums’ debit balance and brings limited earni Q ‘wo exercise prices, minus the premiums balance account tbe pe The price bearish specific strategics Thee saleles aw based on the sitvation when the invesce ‘market's future price is following a decrease and distinguishes two intere ‘atepories: ig rease and distinguishes two in tor Who wishes that the co his profit is based on this ir i object al a spect tin fora detmined rie, to covers contac etigeon Te Coveringesnncion ea ge aNel aff his earings ant tat is whys 8S e mai led hedge, in order to protect himself against this 8° ~ buying along atthe hs BrOUp ae: oo pe the-mone it TR RNG reskeven sie wh ren the premium, in cas hase or synthetic at-the-money long Purse it, aie a ong call. Theoretically, thi artes eS evita {0 the difference between the loss risk limited tothe option’s v3 ae Put contract at a price inferior 1 NNT Premiums ang, sre, ¥estor covers a limited loss, et! "© me » atthe same time, « maxim limited ea" ‘ avin *“between the $0 excise prices, minus ye unt ree Premiums balance ea send consis in sling cll ena a pri another call contract fromm inferior to “ing of notes all contact fom te sane ass TRetoe 0 simultaneous ~eanings which is equal to the premiums" credit balance and ns) iis the _Gregual io the difeence ofthe two excise pricey wang bs, hich ‘ Minus the premiums sredit ent strategies based on prices volatility ‘he cisscal options’ positions express the traders’ interest @ and it consists in applying the combined state ‘oatracts, classified into: sale ~ the strategy which, using the options’ contracts, the investor buys or sel dite, and exercise price identical; mere = stange ~ the strategy that uses two types of bounded option contracts, whereby jgvestor buys or sells simultaneously couples of put and call contracts, whick have “thir contract's object and exercise date identical, but with different exesise prices ‘he call price being higher then the put price; = Call Ratio Spread ~ is a strategy whereby the investor buys a call contract at's Tower exercise price and simultaneously, he sells two contacts from the san _subelass ata higher exercise price The presence oF risks on the capital market and especially on a emergent market {ike Romania) enforces the application of strategies in order to minimize them. In Romania, the investors ean apply the mentioned strategies on Sibiu Monetary Firancisl and Commodities Exchange, In the same time, Romania's integration i ion facilitates Romanian investors’ access on the Earopean mature exchanges a ‘offers the possibility of using the investment strategies already ‘mentioned. REFERENCES oo, T, Nan Sanda &Co. Arch towards the price’s increase gies for the call and the put (Cusman, Dims, Eros‘Staik . Farcas ‘Publisher, Timisoara, 2004 “Financial Markets and Exchange's Popes Veil & Co.-"Fuurce and options” AMES. SM ea. New Yer stato Fates 1, nr Bc 2 eee Ye an, Emo MMR oe (UC "Harpe & Row is ef Manager race" ae’ operations, Mito Plier, Taito 1997 (CTPVD Capital Mask le Rsk in Economic Activity leu, M.,-"htanager's ABC’ Gh om Responsibly Centers MEM ve) es Oe