Delivery - positions or number of short positions...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Delivery If a futures contract is not closed out before maturity, it is usually settled by delivering the assets underlying the contract. When there are alternatives about what is delivered, where it is delivered, and when it is delivered, the party with the short position chooses. A few contracts (for example, those on stock indices and Eurodollars) are settled in cash When there is cash settlement contracts are traded until a predetermined time. All are then declared to be closed out. 1
Background image of page 1

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

View Full DocumentRight Arrow Icon
Some Terminology Open interest: the total number of contracts outstanding. This equals to number of long
Background image of page 2
Background image of page 3

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

View Full DocumentRight Arrow Icon
Background image of page 4
Background image of page 5

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

View Full DocumentRight Arrow Icon
Background image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: positions or number of short positions Settlement price: the price just before the final bell each day. This is used for the daily settlement process Volume of trading: the number of trades in 1 day 2 Convergence of Futures to Spot Time Time (a) (b) Futures Price Futures Price Spot Price Spot Price 3 Questions When a new trade is completed what are the possible effects on the open interest? Can the volume of trading in a day be greater than the open interest? 4 Futures for Crude Oil on Aug 4, 2009 5 Futures for Soybeans on Aug 4, 2009 6...
View Full Document

Page1 / 6

Delivery - positions or number of short positions...

This preview shows document pages 1 - 6. Sign up to view the full document.

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