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Questions tagged [futures]

For questions relating to futures contracts.

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23 views

Futures and premium

A stock will either go up to uS or down to dS next period. The risk-free rate is r. I'm using replicating portfolios to derive the premium on a futures contract with futures price F. What would the ...
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1answer
103 views

Where does the profit come from in short selling futures?

I perfectly understand short selling when a person borrows items, sells them at high price, waits for price to fall and buys back the goods so he can return them from where he borrowed and hence ...
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1answer
42 views

How can closing future contracts profit from short and long positions?

So how can this be possible, in shares it can be like this benefiting on long position on shares here someone will buy shares lets say for 100 and expect them to rise to 120, if they rise to 120 he ...
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2answers
63 views

Who infuses the futures contracts in the first place in the market?

Who is the very first buyer of a futures contract? Don't tell me the first seller of course because then it's spontaneous to ask who did that seller bought from in the first place ?
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4answers
4k views

Scenarios for a 25 yo finishing a PhD staying in Academia, but hope to invest her $100 K USD [duplicate]

Suppose 1: I am a 25 year old just about to finishing my PhD in pure mathematics, and have saved about $100 K USD so far in my life. I have saved all $100 K USD in an American Bank (actually Bank of ...
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1answer
49 views

comparing futures of different length

I am wondering how do I compare two futures of different lengths. Let's say I am to need to buy a future for a year and I can buy two kinds of futures, one for half a year which is x higher than the ...
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2answers
41 views

Currency Future Contract's future fixed price?

Future and options are basically the same with the other using premium and w/o obligation. When trading FX options, you set/buy a strike price. Hence an agreement/was made on a fixed price. In the ...
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3answers
52 views

How does producer and manufacturers trade commodity futures?

I get the idea of future trading and its original purpose. However, I cannot quite understand how things work when traders and speculators are involved. For example, lets say a producer actually wants ...
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1answer
34 views

What are the names of contracts being traded on the Futures and Options markets?

These are standardized contracts that allow you to bet on the future price of assets - commodities, stocks etc You can even buy a right to purchase a stock on a certain date or the reverse, force ...
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2answers
95 views

Oil Futures and Prices

I am looking at the following chain of oil futures: https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html Based upon what I am seeing, the market thinks that the crude oil ...
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1answer
48 views

What types of derivatives, other than stock options, are available to the retail trader? [closed]

How can a retail trader identify other derivative instruments to trade, and how can one go about doing so?
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2answers
132 views

Hedge against crypto currency / exchange risk

I have securities that have crypto-currencies (say, XBT/BTC) as a base currency and I want to avoid the tremendous volatility of this market. There are options for margin trading of sorts (shorts, ...
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1answer
235 views

Time decay of futures

Web site such as this one here state that futures contracts do not experience time decay. I fail to see why futures do not experience time decay. The way I see it (perhaps incorrectly) is like this: ...
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2answers
175 views

How do Bitcoin futures acutally affect the underlying spot market?

Lets say when the futures expire today on settlement date, does the seller of the future actually literally sell BTC on the open market so he can pay the cash to the Future buyer/holder? I was told ...
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2answers
311 views

What does the price for a wheat futures contract represent?

I don't quite understand how the pricing for wheat futures works. Supposedly, for Chicago SRW, the contract is for 5000 bushels. So a call would allow me to buy 5000 bushels, but at what price? What ...
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1answer
45 views

Futures and forward contracts are very different from each other

** Assume two traders enter into a one-year (March 2019) Euro futures contract at a futures price of 1.1220 physically delivered. Regardless of the spot price on the settlement date, if the spot ...
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2answers
94 views

Hedging against currency risk

Is there a hedging method against currency risk without lowering returns ? Classic hedging methods like forwards, futures options, all have a cost and don’t remove risk “for free”.
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1answer
77 views

Forex instead of futures as a hedge

Why don’t companies use forex trading as a hedge for their foreign exchange risk instead of futures ? Forex is much more liquid than futures, easier to have access to all your positions anytime, ...
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2answers
129 views

Determining Futures price on the delivery date

When traders don’t get out of their fx futures positions before they expire, on the delivery date, is the amount exchanged the specified price on the contract when it was signed or the spot price ...
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1answer
97 views

Margin accounts and futures delivery

I'm trying to understand the market mechanics of futures with delivery. For sake of example, assume 0 interest rates and no cost of carry, and that I bought a futures contract on Jan 1 with Feb 1 ...
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0answers
289 views

How does closing a futures position work?

Suppose A takes a long position by buying a December gold futures contract in January, and B at the same time takes a short position by selling the contract. The orders from A and B are matched and ...
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1answer
125 views

Why are there futures for some commodities but not others?

Apparently there are 32 commodities for which there are futures available, but I don't understand how these 32 were chosen. Surely these can't be the top 32 most sought-after commodities-- the list ...
2
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2answers
79 views

A Forward contract and the current exchange rate [closed]

I am a business person operating in France and I need $100k in three months for an international payment. If the current exchange rate is in my favor, why do I need to enter into a 3-month forward ...
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1answer
46 views

Swaps applied in futures contract?

Are swaps needed in order to hold positions in currency futures overnight the same way they are needed in forex spot trading?
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1answer
175 views

What is the minimum amount of money that is needed to start trading in the London Metal Exchange?

How much money is needed to start trading in the London Metal Exchange (LME)? I am interested in investing in cobalt, lithium, and nickel.
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2answers
1k views

What are the ways to invest in cobalt, lithium, and nickel?

How to invest in metals like cobalt, lithium, and nickel? I am not interested in investing in firms that are mining them but in investing in metals directly (via futures or other instruments). ...
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3answers
166 views

Confusion with settlement time in stocks, forex, futures etc

I've been trading cryptocurrencies for a little while now, and recently I have been looking into stocks, futures and forex etc. During my research, I have run into a subject called settlement times. I ...
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1answer
79 views

Tax reform: is the futures 60/40 tax treatment the same?

In 2018 and beyond will futures contracts retain the favorable 60/40 tax treatment? Or has that been modified/repealed
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3answers
439 views

Several questions on Bitcoin futures

I have been reading news on crypto-currencies. As a developer, I understand well how Bitcoin works. I also have a basic understanding of finance in general and stocks in particular. I understand how ...
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4answers
180 views

Can I use stock futures as an indicator for price movement?

I'm not too familiar with futures. I think it's where people bet on where a stock (or other instrument) will go (either up or down). I'm wondering, is there a way for me to see for example for a ...
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0answers
518 views

Logistics of Hedging INR investment with USD INR future

I am a beginner so please forgive any gaps in my understanding of Forex Futures. Based on RBI's decision earlier this year to let NRI's invest in rupee futures I want to propose a Currency Futures ...
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1answer
134 views

Why do commodities futures prices have “-” in them

I'm trying to understand how commodities futures are priced. I was looking at a chart of ZSF18, and the price is 990-4s. What does that mean?
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1answer
114 views

Confused about eurodollar futures

A eurodollar futures contract is a cash-settled futures contract based on a Eurodollar Time Deposit and having a principal value of USD $1,000,000 with a 3-month maturity. Suppose that a a bank ...
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1answer
53 views

Variation margin on closed position

I would appreciate an explanation for the following problem: Trader A is long a futures position worth $10 and Trader B is the short counterparty. Since it is exchange-traded the contract is cleared ...
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1answer
100 views

Options on the E-mini S&P 500 Futures at the CME: what's the expiry date of the underlying future?

The Chicago Mercantile Exchange (CME) has a variety of options on the E-mini S&P 500 (E1A,E2A,E3A,E4A,E5A,E1C,E2C,E3C,E4C,E5C,EW, EW1,EW2,EW3,EW4, and ES). Looking at the contract ...
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1answer
146 views

How is Shooting Star treated when a stock is in uptrend

So I've started learning Candlesticks and I stumbled on Inverted Hammer i.e. shooting star. I was wondering what would I do with it when it appears in a uptrend stock.
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2answers
481 views

Black scholes, futures, and American vs. European options

After having taken a look at this question about American and European options I was under the impression that the main difference between American and European options in Black Scholes pricing was ...
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1answer
32 views

How Emini/Minifuture price is set against its underlaying instrument?

I'm tracking tick bid/ask price of an instrument MINI L OMX AVA 191, that is every change in the bid/ask price of this Emini or what is called in Sweden "Mini futures", against its underlying ...
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2answers
236 views

Futures and Bonds Pricing and Contract Terms

What do the listed futures price, say, here, actually mean? I am confused because my understanding of futures is that any two people can enter into a contract at any price with any delivery date. ...
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1answer
223 views

What price side am I paying when shorting stock / future

I know that question was asked here numerous times but I don't think it was ever answered clearly. When I'm short selling a security (stock/future...) I pay a bid price (with a MKT order - when I ...
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2answers
81 views

Trader Fostering Program on Futures Day Trading [closed]

I'm an Engineer, specialized in signal processing. Caught interest in the market so started reading "The intelligent Investor" and had a bunch of books queued for reading before deciding to commit ...
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2answers
200 views

Is there any flaw in this investment scheme?

I seem to have figured out a way to lose as little as possible while having the potential to cash in big: Say there is this futures/stocks/commodity, let's call it LOOT. I can borrow LOOT from an ...
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1answer
123 views

Why is there an abnormality in farthest month's future contract?

I recently started trading futures and I have noticed that many-a-times the farthest month's future contract is priced at an insanely cheap rate. Thus, anyone can buy it and be rich. For example ...
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1answer
45 views

comex gold futures contracts with two brokers

Can I close a gold futures contract for sale with one broker, with a purchase contract with another broker?
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1answer
74 views

How does contango actually affect the price of an ETF?

How does contango actually affect the price an ETF trades at? For example, take the Unites States Oil Fund (USO) that is supposed to track the price for West Texas Intermediate (WTI) crude. It is ...
2
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1answer
82 views

How to continuously plot futures data

Since futures trade on a contract by contract basis, how can you plot the price over an extended period of time? As a reference I have included a plot of VX futures (VIX CBOE volatility index) from ...
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2answers
3k views

How are they earning money in the movie “Trading Places”?

I was watching a movie called "Trading Places" and it's about stocks. I need help because I don't understand stocks yet. A stock was for 142-146 that was the highest then when it reached the highest a ...
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1answer
696 views

What do stock market index future bid/ask quotes mean?

I see bid and ask quotes for stock market index futures (e.g. the S&P500 mini future contract). However, I've just read from multiple sources that there is no cost to enter into a futures contract....
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1answer
306 views

How did this author lose so much money? [duplicate]

Recently I have been reading a book called Market Wizards. The author talked about his own experience: "I had done a very detailed analysis of the cotton market throughout the entire post- World ...
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4answers
7k views

Buy or sell futures contracts

I cannot find a clear and unambiguous definition of the terms "selling futures contract" or "buying futures contract". From Hull's book: [...] a futures contract is an agreement between two ...