All of the stock market ► Futures
Term futures - means that the contract is for the supply of a certain product, but not now, and in the future. Its main difference from the options that the parties have an obligation to exchange up to the execution of the contract. Although such a contract is determined by the purchase price, the asset until the date of delivery is not paid, however, by the seller and the buyer is required to pay a refundable insurance fee at the time of signing the contract.
In a futures contract, is specified due date, but prior to that date can be freely to get rid of the obligations assumed by selling or buying futures. Execution of the futures contract is carried out in two ways. For supply contracts by supplying the set amount of the underlying asset, and for payment by the difference in fees at the time of conclusion of the contract prices and the last trading date.
Once the buyer and seller have concluded on the stock exchange a futures contract, or any link between them is lost and party transaction for each of them begins to act calculated exchange chamber. Initial margin designed to ensure the clearing house and its members on the risk associated with non-performance by one of the customers of their obligations under the contract. The initial margin deposit or guarantee security - is a refundable insurance fee imposed at the stock exchange at the opening position in a futures contract, usually a few percent of the current market value of the underlying asset. Initial Margin is charged with both the seller and the buyer. At the leading stock exchanges of the world, in calculating the collateral used technique SPAN (The Standard Portfolio Analysis of Risk). SPAN analyzes warranty under different market conditions. Many portfolios include positions that offset each other, in such cases, the minimum requirements SPAN may be lower than in other systems, calculation of collateral.
In contrast to the same shares, the purchase of futures is not required to pay the full price of the underlying asset, we need only fifteen percent of the maintenance of its market value and the financial result will be the same high-grade, as well as from transactions with the underlying asset. However, the risks of trading in futures contracts is much higher, because the loss of the investor when the market moves the wrong Guess increase proportionally resulting shoulder, it is on this market and produces a daily calculation of the variation margin, ie calculates the profit or loss of the current day for the futures position held by the client.
Futures - a stock exchange contract for the supply of a certain quantity of goods specified quality fixed on a certain date in the future price. In fact, the futures is very similar to a forward contract, but the main difference between the futures of forward - Payment options contracts. Forward, unlike futures, does not require any intermediate settlements between the parties to the transaction, and all calculations are performed on the day of delivery of the underlying asset.
In order to ensure the liquidity of the futures and to guarantee the fulfillment of all transactions, the exchange of contracts specification introduces convenient for the majority of market participants. The specification contains the date of the contract, the amount of the underlying asset in a contract, as well as the trading rules of the contract.
Futures, as the exchange contract is revalued on a daily basis, the results of bidding clearinghouse and exchange settlement price is formed by the method described in the specification of each of the exchange of the futures contract. On the basis of the settlement price, the exchange clearinghouse overestimates each open client positions on futures contracts with the write-off of accrued profits or losses from the customer's account. Thus, the exchange monitors the availability of sufficient funds in the accounts of clients to maintain open and futures positions on the futures market. The amount of money that is blocked on the client's account at the opening of the next futures contract and invoicing application for its fulfillment is called "collateral contract." It is a definite part of the total amount of the transaction with the underlying asset, sufficient for settlement within the nearest trading session. At the time of the initial opening of a position in a futures contract on the account of the buyer and the seller will be blocked sum needed to make a deal with a small margin for losses during a given trading session.
The basis - the difference between the futures price and the price of the underlying contract on the spot market. Since the futures price takes into account the present value of the underlying asset at a predetermined date, the theoretical value of the futures must take into account the volatility of the underlying instrument. This is confirmed in practice, on a quiet market the difference between the price of the underlying asset in the spot market and futures on the asset, called the baseline, less than the same basis in the period of increased volatility in the contract.
It is the fact that the price of the futures often changes more sharply than the price of the underlying asset for a player in the futures market is very important. Some participants used this imbalance to implement arbitrage strategies. At the same time large amplitude fluctuations of the price increases the overall risk of the portfolio, and these particular futures to consider when working with marginal positions. Today, futures trading in its technique is less different from trading in the spot market.
If the transaction with futures buyer and seller fixes the price, it means for them the future price supply a certain amount of the underlying asset at the date of expiration or delivery futures.
The price of futures affected by the same factors as in the forward price, contract period of life, risk-free rate of interest, dividends, if futures on shares and the costs related to the asset storage, if it is a commodity futures.
The functioning of the futures market
Global futures market is now one of the main components of the global financial system. He works closely with the securities market and the market interest rates. Futures on commodities and financial instruments now play a decisive role in the development of commodity exchange, as an economic mechanism.
In the financial markets involves a variety of institutions, private investors, banks and financial institutions. In all developed countries the financial market is regulated at the public level. It provides uninterrupted operation of the whole system of exchanges bodies that ensure execution of transactions.
Among commodity futures most actively traded futures on crops, livestock products, textiles and food products, as well, in this group include rubber and even frozen orange juice concentrate. The bulk of futures traded on world commodity exchanges. Among industrial futures were essential futures for raw materials and energy, oil, gasoline, diesel fuel, fuel oil. Actively traded futures colored, industrial and precious metals. Among the non-commodity futures contracts on the most popular currency, and a variety of financial instruments. They help market participants to form a complex financial model and significantly reduce risks in their daily activities. In addition, the entire industry in the management of the assets' Quantum Funds "is developing in recent years. In Russia, the largest platform for derivatives trading is FORTS. Exchange itself is developing terms of the contract, such as delivery times, calculations, quality and quantity of products in a single contract.
These conditions are standard for each asset. The very subject of the contract must be uniform quality standard product.
Futures contracts are highly liquid, there is a secondary market for them. Because by their terms they are the same for all participants, time and transaction costs for the conclusion of such a contract are minimal.
A significant advantage of the futures market is the high reliability, performance of the transaction is guaranteed by the exchange clearinghouse. By signing the contract, contractors there is no need to work out what the financial situation of their partner.
Today, the financial system, as never before, is based on a fragile basis for a multi-stage mechanism of debt financing, most of which falls on the United States. stock market collapses in recent years shows that it is losing the most private investors who have enough experience in the stock market. One of the market collapses began with the sale of one of the banks of futures contracts that have accumulated on its accounts.
Province of derivative financial instruments of interest for non-professional speculators and professional portfolio manager. Today, in developed markets total derivative instruments market turnover more than seven times the total stock market turnover…