New answers tagged futures
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Let's say the commodity you are talking about is gold, I know it's possible to work out the correlation coefficient of stocks with the price of gold as I have done it before on the entire stock market. That's when I found out that gold producers have the highest degree of negative correlation with the main indices. I wasn't actually even looking ...
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An alternative way to short a security is to create a Synthetic Short using its options, if they exist.
This strategy utilizes two option positions. A short call is sold and the proceeds are used to buy a long put, both with the same strike and expiration. This combination has a similar risk and reward to shorting the underlying with the difference being ...
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The forward price on initial date corresponds to the initial price of the strategy that gives this payoff at times T. So here is the strategy:
You buy the asset at time 0. It costs S0.
You sell a bond with nominal K*B0. At maturity, you will pay K.
At initial time, the strategy value is S0-K*B0.
At maturity date, the strategy value will be your payoff ST-...
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An option has a purchase price while a future only has a margin deposit. Now a future can have a required delivery date but can be financially settled before the delivery date.
A Eurodollar future represents only the value of a change in interest rates of a dollar time-deposit in Europe. So in my view, a Eurodollar does not represent a loan value but is ...
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Simple answer: You can't eliminate the roll yield effect. But I'd say that futures performance is already "mostly" driven by moves in commodity spot prices, since these tend to be larger than the cost-of-carry contributions (e.g., a commodity easily moves 5% up or down in a month whereas cost of carry is a fraction of a percent per month).
The normal case ...
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There are "optimum yield" commodity indexes, that choose which dated futures contract to roll-into, that ETF's can license:
https://index.db.com/dbiqweb2/servlet/indexsummary?redirect=benchmarkIndexSummary&indexid=91400¤cyreturntype=USD-Local&rebalperiod=2&pricegroup=STD&history=4&reportingfrequency=1&returncategory=TR&...
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With an equity trade, transfer of title occurs between the parties of the trade. Settlement involves not only the transfer of shares between counter parties but ownership is also recorded on the share register via a transfer agent.
An option trade involves a contract created between a buyer and a seller. There is no transfer of title via a transfer agent, ...
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