Futures

Futures contracts are, in fact, a sort of derivative. Because their value is reliant on the value of an underlying asset, such as oil in the case of crude oil futures, they are derivatives. Futures, like many derivatives, are a leveraged financial instrument that can result in large gains or losses. As a result, they […]

Index futures track the prices of stocks in the underlying index, similar to how futures contracts track the price of the underlying asset. In other words, the S&P 500 index measures the stock prices of the 500 largest corporations in the United States. Similarly, futures contracts for the Dow and Nasdaq indexes mirror the prices

Individual equities or an index, such as the S&P 500, can be used to purchase stock futures. A futures contract buyer is not required to pay the entire contract price up front. An initial margin, which is a proportion of the price, is paid. An oil futures contract, for example, is for 1,000 barrels of

During a trading day, stock day traders buy and sell equities based on price fluctuations. Futures day traders purchase and sell derivatives and options depending on fluctuations in the price of commodities futures contracts on a daily basis. During a trading day, forex day traders purchase and sell currency pairs in order to profit from

The value or spot price of an underlying asset in a derivatives contract is referred to as notional value. The value of the assets underlying the futures contract is determined by the notional value calculation. The contract size is multiplied by the price per unit of the commodity represented by the spot price to determine

Gold futures are standardized, exchange-traded contracts in which the contract buyer promises to acquire a particular quantity of gold from the seller at a predetermined price on a future delivery date. Companies in the precious metals business can use gold futures to hedge their gold price risk on a planned future purchase or sale of

The Dojima Rice Exchange in Osaka, Japan, hosted the first modern organized futures exchange in 1710. The London Metal Market and Exchange Company (London Metal Exchange) was created in 1877, however the market dates back to 1571, when the Royal Exchange in London first opened its doors. Prior to the creation of the exchange, dealers

To profit from a price movement, a futures spread requires taking two bets with separate expiration dates at the same time. Each side of the unit trade is considered a leg of the unit trade, which is exchanged simultaneously. Are there futures spreads? Futures Spreads: An Overview Spreading, a transaction in which you buy one

Trading can, however, take place outside of regular stock market hours. On days when there is a regular session, for example, there is “pre-market” trading, which can begin as early as 4 a.m. and continue until the market opens at 9:30 a.m. There are also “after-hours” seminars, which take place between 4 and 8 p.m.

A lot size in futures is the smallest number of shares that can be traded in a single transaction. You can only buy and sell futures and options in increments of one lot or multiples of the lot size while trading futures and options. The lot size of the Nifty, for example, is 75 units,