Introduction
>
More about Futures
More about Futures
Futures are a special type of forward contract. A forward contract is concluded at one moment in time for the delivery of a commodity at some point in the future for a price defined at contract closing. Futures are forward contracts traded on derivatives exchanges:
- Chicago Mercantile Exchange,
- New York Futures Exchange
Contractual conditions for individual contracts are standardized and follow the rules of the given exchange. Such a contract is a fixed agreement between two partners who have the right and obligation to buy/sell a quantity of the given financial instrument at a specific moment in the future with and agreed-in-advance term price.
| Futures specifications | |
| Contract size | Standardized, mini, micro |
| Collateral | In the form of an additional margin |
| Contract liquidation before maturity | Compensating contract (closing opposite position before maturity) |
| Contract conditions | Standardized |
| Delivery date | Standardized |
| Market | Public - futures exchange |
| Fees | Standard broker and market fees, no entry, exit or management fees are charged. |
| Daily valuation of futures | Yes (mark - to - market) |
| Delivery | Normally agreed as a compensating contract before maturity |
| Price limits | The exchange can set a daily price limit and maximum number of open positions. |
