A derivative is a type of contract so-named because it derives its value from the performance of an underlying entity (e.g. the applicable interest rate). Derivatives can be used for various purposes, including hedging (insuring against price movements), speculatively increasing exposure to price movements, or accessing assets or markets that are more difficult to trade. Some more common derivatives include forwards, futures, options, swaps and variations such as synthetic collateralized debt obligations and credit default swaps.
If your fund has investments in Derivatives, you can enter details in the Investments section of the Mclowd Fund Setup procedure.
NOTE: Currently, the only Derivative type supported by Mclowd is Equity Options. Please contact Mclowd support staff for advice of a work-around if your fund holds other types of Derivatives.
In the Fund Setup Menu, select INVESTMENTS or go to https://app.mclowd.com/assets?entryType=balance.
Mclowd displays this screen:
Click ADD NEW OPENING BALANCE.
Select the Account.
In the Assets Class dropdown, select Derivatives. In the Assets Category, select Domestic or Foreign.
Select Equity Options from the drop-down Asset Type list.
Enter the Stock Code for your asset. As you begin to type a code, Mclowd displays a list of assets from which you can select. When you make your selection, the asset name will display in the Asset Name field.
Enter the Purchase date by selecting from the calendar popup.
Enter the Expiration Date by selecting from the calendar popup.
Enter the Premium (Cost), Volume and any Transaction costs associated with the purchase.
Mclowd will calculate and display the Capitalised cost.
Click SAVE ASSET or SAVE & ADD ANOTHER if you have more Derivative Investments to add.
Click SAVE ASSET to go back to INVESTMENTS on the FUND SETUP menu to view a list of your Fund’s investments.