Questions tagged [futures]

For questions relating to futures contracts.

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31
votes
10answers
19k views

Could I make money off of the negative oil price?

I saw the price of oil did something at about 1 PM Eastern time that is really bizarre: it went negative. This means that you get paid to take oil off the field. But, the oil price is negative now, ...
19
votes
7answers
5k views

Can I hedge my household expenses using the financial markets?

Apparently farmers can hedge against high raw material prices and low crop prices by using financial instruments such as forwards and futures. Can I use financial instruments to similarly hedge my ...
18
votes
3answers
9k views

What happens if I do not honor a futures contract?

I have little knowledge about futures contracts. The recent negative price of crude oil spurred my curiosity about this stuff. I read this post about buying/selling futures contracts. According to ...
16
votes
2answers
6k 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?
14
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3answers
3k views

Why are options more popular than futures among retail investors?

I am puzzled as to why options seem to be more popular than futures among retail investors. Brokerage firms seem to emphasize their options offerings more than their futures offerings. On Robinhood, ...
13
votes
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 ...
11
votes
2answers
3k 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: http://www.reddit.com/r/AskReddit/comments/37yawp/...
10
votes
3answers
9k views

Is it practical to take actual delivery on a futures contract, and what is the process?

Usually people trade futures speculatively, ie. they buy and sell contracts without actually delivering the goods. However, technically the futures are contracts for delivery of a certain amount of ...
10
votes
2answers
6k 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 ...
10
votes
4answers
1k views

Why trade futures if you have options?

This article explains the difference between futures and options. It seems a futures contract is an obligation, while an option is a right (not an obligation). If this is true, why would anybody ever ...
8
votes
3answers
11k views

Do futures have premium in the price, just as options do?

Looking at Wikipedia's the pricing of futures, I wonder if entering into a futures contract requires one to pay premium just as entering into an option contract? In other words, is the premium of a ...
8
votes
3answers
296 views

Does a high demand for long commodities Futures push up the underlying spot price?

Let's take a commodity as an example - oil. Suppose there is suddenly a high demand for a 30-day oil futures contract. Will that push up the spot price on oil? I would guess that this would affect ...
7
votes
2answers
477 views

What are futures and how are they different from options?

As a form of investment there are contracts to buy commodities at a specific time in the future or at a specific price. How is this different from an option to buy a share?
7
votes
3answers
7k views

How are futures contracts setup at an exchange?

I'm having a hard time wrapping my head around how the actual contracts are structured at an exchange. Here are my questions: If an exchange facilitates the trading of futures contracts and nobody ...
7
votes
1answer
85 views

FTSE exposure in US Exchanges

Is there a FTSE 100 index futures contract that trades on the US exchanges? Thanks I think there is an ETF but I am looking for futures, mainly for charting purposes.
6
votes
1answer
9k 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 ...
6
votes
1answer
10k 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 ...
5
votes
4answers
26k views

How much would it cost me to buy one gold futures contract on Comex?

I am looking at gold futures prices: http://www.cmegroup.com/trading/metals/precious/gold.html I cannot figure out how much one futures contract of gold would cost me to buy if I were to buy it from ...
5
votes
1answer
283 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?
5
votes
1answer
353 views

Executing an options on futures before delivery date

I have been studying a bit about options and futures. Specifically I want to trade futures of gold and silver (they trade at NYMEX), but to lower risks and take advantage of leverage I have been ...
5
votes
1answer
397 views

When entering a Futures contract, must the margin deposit be idle or can I profit from it?

Let's say I am trading in a Reg-T Margin account. When entering a Futures contract, a certain amount of cash is needed as collateral (usually 5%-15%). I'd like to see that collateral generate income ...
5
votes
1answer
200 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.
5
votes
1answer
91 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 ...
4
votes
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 ...
4
votes
4answers
3k 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 ...
4
votes
3answers
851 views

What do these numbers mean? (futures)

The S&P closed at 1588.85 on April 12th. On www.bloomberg.com/markets/stocks/futures/ For stock futures, it gives the following data: > Index Future | Future Date | Last S&P ...
4
votes
1answer
6k views

Calculating the profit earned from a leveraged futures contract

How do we calculate the profit/loss of Futures contract? For example, If I had a Futures contract that had $10 000 as the underlying, it had $1000 margin and the Futures contract itself was worth $3. ...
4
votes
2answers
2k views

How far into the future is a stock future? How do stock futures work?

I have been looking at the markets recently and most of the time, I see similar articles on how the market is going to do depending on how futures did. I am not that familiar with futures, but how ...
4
votes
1answer
528 views

Futures on non-fungible goods

There are trade futures contracts on goods that are inherently heterogeneous, like live cattle, soybeans, or oil. When one trades a good like gold, all gold is pretty much the same, so all one needs ...
4
votes
3answers
1k views

How do you go about buying currency futures for foreign currencies?

I was interested in buying currency futures for some foreign currencies. How do you go about getting these? I am looking for 6 to 12 month futures.
4
votes
2answers
604 views

Can the shorting of S&P futures negatively affect the underlying index and constituent stocks?

I hear people on financial shows talk all the time about index futures like SPY and QQQQ affecting the actual index. Can shorting these futures (in huge quantities obviously) cause the underlying ...
4
votes
1answer
99 views

How prevalent are futures in the agricultural industry?

I realize that many agricultural companies sell their crops or livestock via futures contracts to manage the risks inherent to their industry. It seems to me that this kind of activity would be ...
4
votes
1answer
5k 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 ...
4
votes
2answers
2k 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 ...
3
votes
2answers
5k views

How does spot-futures arbitrage work in the gold market?

At the time of writing: According to Kitco, the spot price for gold is about $1240 per ounce. According to CME Group, futures contracts are above that price for many months ahead. Why couldn't I buy ...
3
votes
4answers
174 views

Are buying and selling futures based on objective data?

I was thinking the other day that buying or selling futures is like gambling. It's based on no objective data and once you start pouring your money into it you can lose a lot... Are buying and ...
3
votes
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). ...
3
votes
2answers
14k 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 ...
3
votes
3answers
501 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 ...
3
votes
4answers
340 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 ...
3
votes
2answers
2k 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 ...
3
votes
1answer
89 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 ...
3
votes
1answer
109 views

10-Year Treasury Future Quotes

The CBOE lists the current price for a June 2013 10-Year Treasury future as 132'155. The contract specifications state that the price quote is Points ($1,000) and halves of 1/32 of a point. Does ...
3
votes
1answer
136 views

What exactly is the spot market?

I understand for commodities such as crude oil, there is NYMEX exchange where futures contract are listed and traded. Where exactly do I find the spot market? How does it work? Where is the price ...
3
votes
2answers
4k 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. ...
3
votes
1answer
61 views

If a European investor goes long or short the US ultrabond future, are they taking any forex risk or is it all interest rate risk?

(The Ultrabond future is a bet on the price of 30-year US treasury bonds, which are dollar denominated.)
3
votes
1answer
135 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
3
votes
0answers
52 views

After hours matching

I put in an after hours sell order, well below the standard hours and after hours ask, on a liquid Dow futures security. The transaction did not complete. I looked in the ledger detail and found that ...
3
votes
2answers
532 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?
2
votes
4answers
836 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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