Questions tagged [futures]

For questions relating to futures contracts.

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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 ...
6
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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 ...
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2answers
2k 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 ...
2
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3answers
769 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 "...
3
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2answers
3k 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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2answers
329 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
94 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 ...
2
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1answer
290 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 ...
2
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1answer
211 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
898 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
2k 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
179 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
473 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
3k 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
2k 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 ...
0
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3answers
997 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 ...
2
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1answer
1k views

What is a “spread” in commodities futures?

I was reading an article and it states Tightness has returned to the London Metal Exchange (LME) aluminium spreads. The focus point this time around is the December-January spread (CMALZ4-F5),...
2
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1answer
168 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
235 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 ...
2
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2answers
547 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
117 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
2k 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
8k 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 ...
3
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1answer
84 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
82 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
240 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
13k 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 ...
2
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1answer
4k 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
5k 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
95 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
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 ...
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1answer
1k 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 ...
2
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1answer
478 views

Difference between full and mini futures contract

What is the difference between the following two Brazilian futures contracts: The Ibovespa Futures Contract The Mini Ibovespa Futures Contract As far as I can tell, both are priced in Brazilian Real ...
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1answer
250 views

How to calculate micro lot leverage?

For these gold and silver products http://www.fxdd.com/us/en/products/metals/, how many micro lots are required so a penny move is worth a dollar? How much leverage does that equal? I've traded ...
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3answers
6k 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 ...
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1answer
9k views

Is the delivery price of a forward contract different from the forward price?

Is there any difference between the delivery price and the forward price of a forward contract? From the definition Investopedia gives of forward price and delivery price, they appear to be the same. ...
3
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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 ...
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2answers
3k views

How do freight derivatives like Forward Freight Agreements (FFAs) work?

Re: http://www.balticexchange.com/default.asp?action=article&ID=35 Freight derivatives provide a means of hedging exposure to freight market risk through the trading of specified time charter ...
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2answers
4k views

Is there a Yahoo Finance ticker for NYMEX Crude Oil Front Month?

I see tickers like on specific monthly futures like CLN13.NYM, CLQ13.NYM, etc. But is there on Yahoo Finance something like "CL1.NYM", i.e. ticker that always is pointing on the front month future. ...
9
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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 ...
4
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3answers
801 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 ...
3
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1answer
105 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 ...
2
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1answer
498 views

How is the price of VXX determined?

I'm trying to understand how VXX works (the prospectus on Barclay's Ipath). It says that it has a rolling position in futures (1 month and 2 month). Does that mean that it buys and sells contracts ...
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1answer
380 views

Futures initial margin and maintenance margin

I just a had a quick question about margin in a Futures contract. Suppose, that I have a Futures contract that requires an initial margin of $1000 and a maintenance margin of $500. Suppose that after ...
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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. ...
0
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1answer
710 views

Evidence for/against negative correlation between commodity futures, stocks

I've heard that stocks and futures are negatively correlated over the medium term - e.g. that if stocks experience a brief rise, futures tend to fall, and vice versa, but they move together in the ...
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1answer
4k views

What is forward selling in terms of exchange rates?

We are selling some custom made products which we need to buy materials for in different currencies e.g. 100 USD + 50 EUR + 20 SGD, and we sell the products in a currency that our customer prefers e.g....
2
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1answer
145 views

How does investing in commodities/futures vary from stocks?

I understand the basic concept behind investing in a company via stock purchases: you get some minuscule percentage of the company, and get to benefit from that ownership. Investing in commodities (...
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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.
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2answers
216 views

Hedging against rising oil and gas prices for private households?

Inspired by this article Hedging Against Rising Heating Oil Prices using Heating Oil Futures, I wonder whether hedging against rising oil and gas prices makes sense for private households, too? If so, ...