Features of futures contracts slideshare
3. Forward and Futures Contracts Both forward and futures contracts lock in a price today for the purchase or sale of something in a future time period E.g., for the sale or purchase of commodities like gold, canola, oil, or for the sale or purchase of financial instruments such as currencies, stock indices, bonds. Commodity futures Metals Major metals traded with futures contracts include copper, gold, platinum, palladium and silver, which are listed on the New York Mercantile Exchange which has merged with the Chicago Mercantile Exchange. Energy The most popular energy futures contracts are crude oil, crude palm oil, Futures Contracts Available on a wide range of assets Exchange traded Specifications need to be defined: What can be delivered, Where it can be delivered, & When it can be delivered Settled daily 2 3. Convergence of Futures to Spot (Figure 2.1, page 27) 3 Time Time (a) (b) Futures Price Futures Price Spot Price Spot Price 4. Futures and Forwards A future is a contract between two parties requiring deferred delivery of underlying asset (at a contracted price and date) or a final cas… Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. If the lot size of Tata steel is 500 shares, then one futures contract is necessarily 500 shares. Contract cycle – The period for which a contract trades.The futures on the NSE have one (near) month, two (next) months, three (far) months expiry cycles. Expiry date – usually last Thursday of every month or previous day if Thursday is public holiday.
Because it is a function of an underlying asset, a futures contract is a derivative product. Contracts are negotiated at futures exchanges, which act as a
14 Feb 2014 Trading in Futures Traded on the National Stock Exchange. Expiry Dates of Contracts are Fixed. There is one contract expiring every The Social Function of Futures Markets; Futures Markets' Regulatory Framework and Taxation. Chapter 1. 2. Forward Contracts. A forward contract is an Futures contracts are highly standardized whereas the terms of each forward contract can be privately negotiated. Futures are traded on an exchange whereas Actual Delivery is Rare. Feature # 1. Organised Exchanges: Unlike forward contracts which are traded in an over-the-counter market, futures are traded on
1. Derivatives have the characteristic of Leverage or Gearing. With a small initial outlay of funds (a small percentage of the entire contract value) one can deal big volumes. 2.
3. Forward and Futures Contracts Both forward and futures contracts lock in a price today for the purchase or sale of something in a future time period E.g., for the sale or purchase of commodities like gold, canola, oil, or for the sale or purchase of financial instruments such as currencies, stock indices, bonds. Commodity futures Metals Major metals traded with futures contracts include copper, gold, platinum, palladium and silver, which are listed on the New York Mercantile Exchange which has merged with the Chicago Mercantile Exchange. Energy The most popular energy futures contracts are crude oil, crude palm oil, Futures Contracts Available on a wide range of assets Exchange traded Specifications need to be defined: What can be delivered, Where it can be delivered, & When it can be delivered Settled daily 2 3. Convergence of Futures to Spot (Figure 2.1, page 27) 3 Time Time (a) (b) Futures Price Futures Price Spot Price Spot Price 4. Futures and Forwards A future is a contract between two parties requiring deferred delivery of underlying asset (at a contracted price and date) or a final cas… Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. If the lot size of Tata steel is 500 shares, then one futures contract is necessarily 500 shares. Contract cycle – The period for which a contract trades.The futures on the NSE have one (near) month, two (next) months, three (far) months expiry cycles. Expiry date – usually last Thursday of every month or previous day if Thursday is public holiday.
Because it is a function of an underlying asset, a futures contract is a derivative product. Contracts are negotiated at futures exchanges, which act as a
Futures & Forward contract. Futures are standardized contracts and they are traded on the exchange. On the other hand, Forward contract is an agreement between two parties and it is traded over-the-counter (OTC). Futures contract does not carry any credit risk because the clearing house acts as counter-party to both parties in the contract.
If the lot size of Tata steel is 500 shares, then one futures contract is necessarily 500 shares. Contract cycle – The period for which a contract trades.The futures on the NSE have one (near) month, two (next) months, three (far) months expiry cycles. Expiry date – usually last Thursday of every month or previous day if Thursday is public holiday.
3. Forward and Futures Contracts Both forward and futures contracts lock in a price today for the purchase or sale of something in a future time period E.g., for the sale or purchase of commodities like gold, canola, oil, or for the sale or purchase of financial instruments such as currencies, stock indices, bonds. Commodity futures Metals Major metals traded with futures contracts include copper, gold, platinum, palladium and silver, which are listed on the New York Mercantile Exchange which has merged with the Chicago Mercantile Exchange. Energy The most popular energy futures contracts are crude oil, crude palm oil, Futures Contracts Available on a wide range of assets Exchange traded Specifications need to be defined: What can be delivered, Where it can be delivered, & When it can be delivered Settled daily 2 3. Convergence of Futures to Spot (Figure 2.1, page 27) 3 Time Time (a) (b) Futures Price Futures Price Spot Price Spot Price 4. Futures and Forwards A future is a contract between two parties requiring deferred delivery of underlying asset (at a contracted price and date) or a final cas… Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. If the lot size of Tata steel is 500 shares, then one futures contract is necessarily 500 shares. Contract cycle – The period for which a contract trades.The futures on the NSE have one (near) month, two (next) months, three (far) months expiry cycles. Expiry date – usually last Thursday of every month or previous day if Thursday is public holiday. This article throws light upon the six major features of futures contracts. The features are: 1. Organised Exchanges 2. Standardisation 3. Clearing House 4. Margins 5. Marking to Market 6. Actual Delivery is Rare. Feature # 1. Organised Exchanges: Unlike forward contracts which are traded in an over-the-counter market, futures are traded on organised exchanges with a designated physical location where trading takes place. Futures Contract: A futures contract is a legal agreement, generally made on the trading floor of a futures exchange, to buy or sell a particular commodity or financial instrument at a
Futures contracts for both domestic and foreign commodities.