Finding new markets and educating people about the true nature of futures
and options are growing fields for market analysts. They're interested in
where the world economy is heading.
"Ten years from now, there's going to be more and more need for the public
to be investing in derivatives -- also called risk management fields," says
Leon Bitton, director of research and product development for a stock exchange.
Market analysts look at what's happening in the world market and predict
what sorts of commodities look good. Sometimes that involves knowing what
industries are going to be deregulated and what opportunities are out there.
Other times, it's a question of coming up with new financial products that
are attractive to the user. Regardless, it always involves keeping up with
"When you get deregulation, you get high price volatility and therefore
the need for a risk management tool," says Bitton. Or you might be looking
for speculation to offset that risk, such as an option on a stock that is
exploring the possibility of finding gold in Singapore.
Purchasing a future is like purchasing a piece of clothing from a catalog
-- you see the shirt, like it, send in your request. No money exchanges hands
until you receive the commodity.
Purchasing an option is like purchasing collision insurance for your car.
The insurance company doesn't pay out unless you have a crash. In that case,
it pays out a set price, even if your car is totaled.
And it's all part of protecting business investment. By offering futures
or options, companies protect their investment. "You have to be up to date
and have a good knowledge of market needs," Bitton says.
If you think this is a narrow field, think again. In Chicago, one of the
biggest markets for derivatives, market analysts have come up with 80 to 90
new products in a single year -- interest rate futures, commodity derivatives,
energy derivatives, pulp and paper and forestry. Meanwhile, the New York Mercantile
Exchange is introducing new products as a result of the deregulation of electricity.
Some qualities employers look for are a good knowledge of the risk management
market, superior analytical skills and the ability to visualize a new product.
"You need to have analyst skills, but you still need the skills of a business
developer," says Bitton. "It's just like launching a new business, except
that you're launching a product."