Questions tagged [futures]

For questions relating to futures contracts.

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153 views

Why does the futures market use stupendously high leverage?

From Investopedia: The futures markets typically use high leverage. Futures contracts may only require a deposit of a fraction of the contract amount with a broker. I know how margin trading works,...
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38 views

Variance of WTI Texas crude price Mar 20 2020

Friday last ie on Mar 20, 2020, the prices of WTI crude were reported as $19.84 (approximately) - this was the closing price on Markets.businessinsider.com and Market watch, sites which both provide ...
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47 views

Eurodollar Futures - How to interpreter the price and correlation on Eur and Usd currency?

My first post here and think I have found heaven. Now I have a problem understanding EURDollar Futures since I mainly do trading in currencies. What impact does a rise in EURDOLLAR futures have on the ...
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71 views

To buy S&P minis or SPY (or VOO)

Let's say I'm going to buy in the market to hold. What are the pros and cons of buying MES futures instead of SPY ETFs for exposure to S&P500? From a high level I know that MES is $5 per point ...
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21 views

What could cause options premiums and futures market to point in opposite speculative directions?

Its 8am EST here in the US. At around 530am the premium per share for a put option of SPY expiring on 2/28 was $0.13. Between 645 and 730 the premium rose to $0.22. This would suggest that a fall in ...
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129 views

By what mechanism can I short a commodity without the use of futures of that commodity?

I live in the US and I work for a company that is heavily related to a particular commodity X. As such, when I began working for them, I signed a document stating that I would not purchase stock/ETFs/...
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1answer
40 views

Initial price of a forward contract

Given that the payoff of a forward contract with strike K and maturity T has the payoff ST - K, how do I prove that the initial price of this contract is S0 - K*B0, where B0 is the price of a bond ...
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36 views

Futures - Eurodollars basic questions

I've been learning about trading futures markets and had a few basic questions. The Dec-20 Eurodollar trades at 98.59 (i.e. by Dec-20 investors are expecting 3 month LIBOR rates to be 1.41%). Now ...
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75 views

Invest in Commodity Index ETP avoiding the rolling Yields

I am looking to invest in an ETP which is based on a Index of Commodities basket. From previous question I understand that investing in indexes tracking Futures prices is most likely the only ...
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1answer
56 views

Why do trades of options and futures typically settle faster than trades of stocks?

I read on https://en.wikipedia.org/w/index.php?title=T%2B2&oldid=929203291#Application: The two-day settlement period applies to most security transactions, including stocks, bonds, municipal ...
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21 views

Is there a time limit for 1256 contract tax loss carry-forward?

I was wondering, is there a time limit for 1256 contract tax loss carry-forward? Or can you carry the loss forward indefinitely? I saw a website that suggested that the limit is typically 7 years, ...
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1answer
35 views

How much amount is tranferred in market to market settlement of futures?

The book by J.C. Hull gives a proof that if interest rate is constant, futures price is same as forward price (no-arbitrage price). In the proof outlined in the book, scenario of daily settlement is ...
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170 views

Block Trades for stocks

Which organization reports block trades for futures and options? There are a lot of webpages which report block trades but what is the organization which is tasked with reporting block transaction? I ...
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1answer
115 views

What does it mean to short a futures contract?

I am currently studying the convergence of futures price to spot prices. I know that as the delivery month of a futures contract is approached, the futures price converges to the spot price of the ...
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2answers
119 views

How to calculate daily return and cash when holding a futures position?

I have a futures trading strategy and want to calculate the daily return. I need this to get the Sharpe ratio of that strategy. The daily return of my strategy should be: EOD ...
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41 views

How well do Treasury bond Futures correlate to their hypothetical underlying bond?

How well do Treasury bond Futures correlate to their hypothetical underlying bond? If the price of the future is most tightly related to the current CTD, whose maturity varies widely, how can the ...
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153 views

Meaning of “non-reportable” and “dealer intermediary” in the CFTC COT report

What is intended with "non-reportable" and "dealer intermediary" long/ short positions in the CFTC COT report HERE? My toughts of "dealer intermediary" is that they could be the fx brokers; in other ...
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3answers
199 views

As a trader, why would you trade forex or options/futures instead of stocks?

My apology for the novice question: I've seen a certain number of people trading forex, future or options as their full time career, and my understanding is that they have all been through stock ...
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92 views

How does trafigura hedges the price risk?

I wanted to know how does company like trafigura hedges against price risk? Example if trafigura agrees to sell say a barrell of WTI crude oil @ $56 3 months hence. How would they hedge it? Would ...
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1answer
123 views

Difference between CFTC COT report and COT legacy?

Does anybody know the difference between the CFTC COT report and the COT legacy report on https://tradingster.com/? Numbers are quite different between these two.
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1answer
121 views

Premium charges

can anybody explain me please what Premium charges in CBOT Rulebook - https://www.cmegroup.com/content/dam/cmegroup/rulebook/CBOT/II/14/14.pdf (section 14108 Premium charges) are? I am somehow ...
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1answer
116 views

Understanding the notion of future options

I am currently studying different types of option-related derivatives and I am quite confused about the notion of “futures options”. My textbook says that A futures option is the right, but not ...
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1answer
212 views

Why isn't there any movement on the crude Palm Oil futures market?

I am trying to understand why it seems so hard to trade futures contracts of crude palm oil. I know the largest futures for it is in Malaysia, but apparently the CME also carries it under the symbol ...
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1answer
73 views

how to find out at what price was future contract agreed upon?

A future contract means buying and selling at a specified price(call it agreement price) on specified date between 2 parties in future so If a stock's spot price is 1000 and future price is 1003,how ...
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1answer
38 views

Relation of underlying's sentiment with Future Contract's status?

Let's say the Future of an index is in Long or Short Covering status. Now this could mean two things: Traders might have a directional upward move of the underlying index. Hence, they are buying ...
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1answer
85 views

Missing Open,High,Low,Close CME Crude Oil

I have been working on the crude oil futures data and have a couple of questions. There are contracts in which the open,high are empty but the low,close price is available. And in some cases none of ...
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34 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
194 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
63 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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69 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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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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65 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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44 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
106 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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57 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
104 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
57 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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159 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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568 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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311 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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504 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
66 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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114 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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82 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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193 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
113 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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1answer
758 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
155 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 ...
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2answers
89 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
58 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?