[Verse 1] Forward contracts lock the price today For assets trading far away in time Cost of carry sets the fair display No arbitrage keeps pricing in its prime Zero value when the deal begins But mark-to-market as the clock spins [Chorus] Derivatives dancing, risk and reward Forwards and futures, swaps by the sword Calls give you options, puts let you flee Margin and marking, convergence key ITM, ATM, OTM zones Time value fading as expiry groans [Verse 2] Futures need margin, initial stake Maintenance levels keep you in the game Daily settlement, no mistake Marking positions, profit loss the same Convergence pulls the future to the spot Basis risk lurks where correlation's not [Chorus] Derivatives dancing, risk and reward Forwards and futures, swaps by the sword Calls give you options, puts let you flee Margin and marking, convergence key ITM, ATM, OTM zones Time value fading as expiry groans [Verse 3] Swaps exchange the flows you want to trade Fixed for floating interest rate exchange Currency swaps where forex fortunes fade Equity swaps give index exposure range Total return swaps capture every gain Pricing swaps through present value chain [Bridge] American early exercise right European waits until the end Moneyness shows if you're in flight Intrinsic value plus time to blend Strike price versus underlying rate Theta decay seals option fate [Chorus] Derivatives dancing, risk and reward Forwards and futures, swaps by the sword Calls give you options, puts let you flee Margin and marking, convergence key ITM, ATM, OTM zones Time value fading as expiry groans [Outro] Settlement cash or physical delivery Hedging risk or speculation spree Master these instruments, set your mind free Derivative mastery, CFA degree
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