For questions relating to futures contracts.

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Futures margin and physical delivery

If I am long a future and opt to take physical delivery, do I need to pay only the difference between the futures price and total margin posted? E.g. If I buy a long contract worth 50000, and by ...
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1answer
66 views

How to find leverage for futures [closed]

In my understanding, leverage is the risk we take for our investment. That is highly leveraged instruments have high risk and high potential reward. But how can we calculate leverage of futures? ...
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2answers
101 views

Is contango a contradiction?

If a market is in contango the futures curve slopes upward as forward prices are higher than today. It is also true that prices must fall as they converge toward the spot price at the time of maturity ...
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1answer
47 views

Why are profit/loss constantly adjusted in futures contracts if the goal is to protect against volatility?

In this article: http://www.investopedia.com/university/futures/futures2.asp?header_alt=g In the chapter "Profit and Losses-Cash Settlement", the author describes that profit and loss are governed by ...
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1answer
40 views

What are p_ask and q_ask columns in .csv trades log file?

I have a .csv file that is essentially a log of trades of futures contracts. I have the column names but can't figure out what some of them are. There are the obvious "date", "time", "contract" ...
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18 views

How to understand currency forward rates?

So I am trying to understand future "fair price" currency rates from forward rates as quoted, say, here. To make things concrete, I read: bid ask EURUSD 10Y FWD ...
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1answer
81 views

Anyone know if IG or Plus500 are scams or not?

I have been doing some research into online trading and came across 2 platforms that are pretty good and user friendly. http://www.IG.com and http://www.plus500.com I have read quite a lot of reviews ...
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2answers
79 views

When are funds available for a withdraw or to trade after a Futures /ES Emini contract? T+3 settlement

Stocks seem to have a 3 day wait (trade plus 3) T+3 for funds to be available to place another trade or withdraw cash without getting a "FED CALL". Options seem to have a 1 day wait. When are funds ...
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1answer
44 views

Tax laws pertaining to day trading of agricultural futures

What are the tax laws regarding the day trading of agriculture futures? I realize these contract are classified as 1256 contracts, and the type of activity I am curious about would definitely fall ...
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1answer
42 views

how an order is matched after a fill?

Assuming I got a fill for an order to sell at a price ES 2018.00 but price is still at 2017.00-2017.25. What are the factor that makes the prices beetween 2017.25 and my order being filled also? And ...
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1answer
86 views

What can one derive, when a near month Index Futures contract price is trading lower than index spot price?

Usually Futures contract price for near month, next month and far month is higher than spot price. Yesterday in Nifty I came across a case wherein March 29-oct-2015 contract was trading at 8268.70 and ...
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1answer
40 views

Settlement time for euronext index futures

I have one simple question about the settlement time for Euronext index futures contracts. Here is a link to the specification for one such contract : ...
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1answer
214 views

Do the gain and loss during futures rollover each month will be even out in long run?

For example, I am using a buy and hold strategy for commodities futures. When spot month close to expiry, I rollover my contract to next month. However, the next month contract are usually wont equal ...
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2answers
90 views

Forward price, price of a forward contract, value of a forward contract

I am confused about the following terms: forward price price of a forward contract value of a forward contract The Hull textbook says that the forward price F0 for an investment that pays no ...
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1answer
316 views

How can I calculate the exposure of future option? [closed]

quantity * delta * index quantity * delta * (index - strike) quantity * delta * min(index - strike, 0)
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3answers
65 views

BRENT/WTI Oil Contract Futures

Every contract that is about to expire always seems to be more expensive to buy than contracts expiring at a later date. For instance, the Sep15 contract is currently priced higher than the DEC15 ...
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1answer
256 views

Why do futures traders write months in a strange way?

I was reading up a bit on futures and found that futures clearing merchants write months in a very unexpected way: Month Month Code January F February G March H April J May ...
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2answers
145 views

Why do requirements after a margin call vary?

I have seen in various places that a margin call requires restoring an account up to The initial margin level (or having this done for you) or The maintenance margin level. As best as I can ...
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2answers
514 views

What does it mean to invest in potatoes?

There is an amusing thread on Reddit where people discuss what they would do with an unlimited supply of potatoes: ...
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1answer
63 views

What is the effect of dividends on the futures price of an index

The futures price of an index already prices in expected dividends that the companies of the index are expected to pay out, correct? So can I conclude that when a company like AAPL announces a ...
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1answer
1k views

How does the futures market affect the stock market?

For instance, at this current moment the SP500 index is at 2094 while the futures on this market, symbol /ES with a contract of June is at 2088. Can someone please explain how traders and investors ...
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1answer
221 views

How does a portfolio of long stocks and short futures generate profits

When a portfolio manager goes long a basket of stocks (that make up an index) and hedges his market risk by shorting the corresponding index future, what is his source of potential profit? He cannot ...
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3answers
745 views

Is there a way to buy raw oil today and sell it in 1 year time?

Is there a way to buy raw oil today and sell it in 1 year time? I would like to do so from the United Kingdom. EDIT: I mean buying shares of oil or whatever other form.. I just want to own it ...
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1answer
252 views

What happens if futures contract seller defaults?

I'm considering buying a put future to hedge against interest rate increase. I know there is a certain level of protection from default as required by the contract, but I assume the risk is not zero. ...
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0answers
84 views

Should I use futures or options to hedge my long SPY position?

If I am long 100 shares of SPY, what are some questions that I can ask myself to decide: Whether I should hedge by selling futures, or by buying put options? What are some pros and cons of each?
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1answer
66 views

What is the source of income for a hedged portfolio

Let us say I am long SPY and I sell the corresponding number of e mini s&p futures. Now, how will this portfolio profit? Will this grow at the risk free rate? The profit from the stock position ...
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0answers
81 views

How to hedge volatility decreases

My particular options positions are typically a long delta, and long vega. Decreases in implied volatility, or specifically the VIX, can drastically alter the profitability of my position. Is there a ...
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1answer
139 views

Why the S&P futures prices are not reflecting the general bullish sentiment of the US stock market

It seems that general sentiment on the long term trend of the US stock market is currently bullish, fuelled by a strong dollar and falling oil prices. Why then are the long term futures (MAR 2016) ...
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2answers
268 views

What is the purpose of marking-to-market a futures contract?

Suppose I enter into a long futures contract to buy 1 ounce of gold at 1200$/ounce for delivery in May 2015. Between now and May 2015, the market price for a similar contract will certainly vary. Do ...
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4answers
140 views

Do individual stocks have futures trading

What is the reason that futures exist on stock indices, but not on individual stocks? My understanding is that individual stocks have options, but not futures. Is there no market for futures on ...
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1answer
91 views

Why is the terminology “put” and “call” not applicable to futures contracts?

Why is the concept of puts and calls applicable to options, but not to futures? Futures and options are similar, the key difference being that futures represent an obligation, whereas options ...
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2answers
210 views

How to invest (trade, or speculate) in commodities?

How would one invest in things for example (wheat, oil, gold, silver, platinum) and other commodities? Does E-trade offer a method of doing this?
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4answers
190 views

Closing a futures position

I would like some explanation as to how a trader closes a futures position. If trader A (short) and B (long) are in a futures contract and trader B would like to close the position, he would have to ...
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2answers
115 views

Future price == strike price in the future contract?

Assume a future contract specifies that the holder of the contract will need to buy corn from XYZ farm at £100 per tonne, 1 tonne. So total deal value when realizing this contract is £100. We all ...
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3answers
70 views

Why is the future quote lower than the underlying?

I guess this is a simple one for experts: Looking now (12noon CET Nov 7, 2014) at the DAX ^GDAXI on yahoo finance, it says S = 9.361. The Future FDAXM5.EX quotes F = 9.388. What is the exact ...
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1answer
136 views

Profits vs. losses from stocks, options, and futures: separate, or combined?

Are stocks, options, and futures all considered part of the same basket for tax purposes? E.g., if one make some profits on stocks and losses on futures, does the IRS allow one to deduct the losses ...
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1answer
146 views

A goldsmith's hedging strategy, simplified

A goldsmith has bought 100oz physical gold for his trade and paid $1300/oz. He is going to be ready to sell his jewels in 3 months from purchase. In order to hedge against falling prices of gold, he ...
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2answers
112 views

Gold futures' margin

How is the margin for gold futures determined? Where exactly can I look to find the current margin (pls, state website)?
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1answer
84 views

Interpreting a Futures Quote

I am trying to understand an F&O Quote page. http://www.moneycontrol.com/india/fnoquote/infosys/IT/2014-06-26 Spot Price 2993.15 Volume 778732 This means 778732 shares were traded on the last ...
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1answer
1k views

Why futures has a mark to market concept that is not present in stocks

A futures contract is traded just like a stock or an option contract. So how come a futures contract has the concept of mark to market whereas a stock or an option does not have this concept? IS it ...
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1answer
2k views

Are futures options eligible for the 60/40 tax rule?

How are options taxed when the underlying asset is a futures contract. Futures contracts in the US have a favorable tax treatment known as the 60/40 rule, where 60% of profits are taxed at the long ...
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1answer
52 views

Futures margin requirements, can more than the initial margin be used to open a contract

Futures margin requirements can be a low percentage in relation to the size of the futures contract. Sometimes, you are only putting down 3% or less to profit from the price appreciation/depreciate ...
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1answer
68 views

What is the difference between future value of cash and Fixed deposit calculator [closed]

suppose my present value of cash is 2,22,051 and its future value is calculated by using the formula FV=PV(1+r)^n with r=8 and n=3.So future value is 12,95,001.432 Now if I go to fixed deposit ...
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1answer
103 views

What are Inters/Intex/Supers?

The CME Group website, under the Margins tab, has a page titled "Inters/Intex/Supers". See here for example. What are Inters/Intex/Supers?
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2answers
2k views

How do dividends of the underlying security in a security futures contract affect the security futures price?

I would assume that increases in any dividends would increase the price of the underlying security, therefore causing a relative increase to the security future price. Or is this relationship more ...
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1answer
1k views

Calculating Daily Returns for Futures Contract

I am calculating daily returns for a position in a futures contract. I am a little stuck with margin and how to account for it. I specifically dont understand how return is calculated after Margin ...
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2answers
2k views

What is the difference between hedging and diversification? How does each reduce risk?

Hedging and diversification are both used for reducing financial risks, but what are the exact differences between these two?
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0answers
76 views

Forward Contract Extension

I was reading this article Below is a small snippet from the article. I'm wondering how Barrick gold could extend the hedge at its own option. How would this be executed and how do they have this ...
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1answer
1k views

Futures contract month code

In futures contracts, the delivery month is reflected in the symbol name with a letter code. The letters for all 12 months in order are F, G, H, J, K, M, N, Q, U, V, X, Z. Where do these letters come ...
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1answer
600 views

What would stop someone from taking advantage of wide bid-offer spreads in extended hours trading via short selling?

I understand that the less volume occurring in a security, the less liquidity (the wider the bid-offer spread). So my question is, in pre-market and after-hours trading, when bid-offer can widen ...