Investment

A futures contract is an agreement to acquire or sell property at a predetermined price (the futures price) at a future date. What is the purpose of a future contract? Futures are financial derivative contracts in which the buyer agrees to acquire an asset and the seller agrees to sell an asset at a defined […]

Taking a short position in the futures market is referred to as a short hedge. In a currency market, a short hedge is taken by someone who already possesses or expects to receive the base currency in the future. After three months, an exporter expects a payment of USD 1,000,000. Assume the current spot currency

The theoretical calculation of how a futures stock index contract should be priced considering the current index value, dividends paid on stocks in the index, days till the futures contract expires, and current interest rates is known as the fair value. What is the difference between futures and fair value? While futures forecast where the

Stock index futures, such as the S&P 500 E-mini Futures (ES), reflect expectations for a stock index’s price at a later date, based on dividends and interest rates. Index futures are two-party agreements that are considered a zero-sum game because when one party wins, the other loses, and there is no net wealth transfer. While

Futures are traded on margin, with investors paying as little as ten percent of the contract’s value to possess it and control the right to sell it until it expires. Profits are magnified by margins, but they also allow you to gamble money you can’t afford to lose. It’s important to remember that trading on

Futures are significant tools for hedging and managing various types of risk. Foreign-trade companies utilize futures to manage foreign exchange risk, interest rate risk (by locking in a rate in expectation of a rate drop if they have a large investment to make), and price risk (by locking in prices of commodities such as oil,

You can currently trade CME Group futures if you are an IBKR client with Futures trading authorisation. Log in to Client Portal and seek Futures trading access from the Settings > Account Settings > Trading Experiences & Permissions menu item if you don’t already have them. How do you use Interactive Brokers to trade Emini

The base market contract for S&P 500 futures trading is the standard-sized contract. It is valued by increasing the value of the S&P 500 by $250. For example, if the S&P 500 is at 2,500, a futures contract’s market value is 2,500 x $250 (or $625,000). How does an S&P 500 futures example work? The

Fed funds futures are financial contracts that reflect market expectations for the daily official federal funds rate at the contract’s expiration date. The Chicago Mercantile Exchange (CME) trades the futures contracts, which are cash settled on the last business day of each month. Fed fund futures can be traded every month or up to 36

You might be wondering what futures are. A futures contract is an agreement between two parties to buy or sell a commodity or investment at a predetermined price at a future date. The vast majority of futures contracts fail to deliver the underlying commodity or security. Because most futures transactions are purely speculative, they provide