Who are the writers of index futures?

Question

For futures, such as oil futures, I understand that the oil companies would be the writers of the oil futures to lock-in selling price. In this context, these oil companies have the underlying assets, namely oil and they can deliver when fulfill the contracts.

For index futures, does it work similarly? i.e., are the writers who have shares of underlying indexes? for ENQ for instance, the writers bought corresponding amount of QQQ?

Or there are two groups of people who are speculating against each other:

1. long group who buys
2. short group who sells

Answer 1

I understand that the oil companies would be the writers of the oil futures to lock-in selling price

That's one possibility. Speculators can be futures writers as well if they think the price of oil will go down, or they could be used to hedge against a long oil position created by, say, options.

So it could be a speculator on the other end, or it could be an entity such as a hedge fund using futures to offset risk, or even a pension fund using futures to reduce exposure to the market rather than selling their positions.

The beauty of a futures exchange, though, is that it doesn't matter who the counterparty is. The counterparty of your long contract could even change multiple times throughout its life as well. This is of no consequence to you - the exchange handles all of this behind-the-scenes.