Futures_IB - market moves and opening a derivative contract...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Futures -standardized contract between two parties  to buy or sell a specified asset of standardized  quantity and quality at a specified future date at a  price agreed today.  party agreeing to buy underlying asset- assumes  a long position party agreeing to sell underlying asset -assumes  a short position. Standardization-  Futures contracts  ensure  their liquidity by being highly standardized usually  by specifying: 1. The  underlying  asset or instrument. 2. The type of settlement
Background image of page 2
Hedgers- who have an interest in the underlying  asset (which could include an intangible such as an  index or interest rate) and are seeking to  hedge  out  the risk of price changes. Eg: producers  and consumers of a commodity  Speculators-seeks to make profit by predicting 
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Background image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: market moves and opening a derivative contract. Eg: independent floor traders and investors. WHY TO TRADE FUTURES: No restrictions on markets to trade No restrictions on time frames to trade Inflation and recession proof Regulation is designed to protect the public interest Regulators try to prevent questionable trading practices by either individuals on the floor of the exchange or outside groups futures contracts must specify at least the following five terms: The identity of the underlying commodity or financial instrument. The futures contract size. The futures maturity date, also called the expiration date. The delivery or settlement procedure. The futures price....
View Full Document

  • Spring '11
  • ke
  • futures contract size, Standardization­ Futures contracts, underlying asset ­assumes, futures maturity date

{[ snackBarMessage ]}

Page1 / 4

Futures_IB - market moves and opening a derivative contract...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online