What is a futures quantity

An exchange-traded futures contract specifies the quality, quantity, physical delivery time and location for the given product. Since the futures prices are bound to change every day, the differences in prices are settled on daily basis from the margin. From Wikipedia, the free encyclopedia. Additionally, the forward contracts market was very illiquid and an exchange was needed that would bring together a market to find potential buyers and sellers of a commodity instead of making people bear the burden of finding a buyer or seller. Derivatives market. This is called the futures "convexity correction. New to futures?

Retrieved Traders must analyze the volume of the aggregate of all contracts to give their analysis more than one dimension. In this scenario there is only one force setting the price, which is simple supply and demand for the asset in the future, as expressed by supply and demand for the futures contract. Such a relationship can summarized as:. Contract codes are configured with one- to three-characters.

Futures are margined daily to the daily spot price of a forward with the same agreed-upon delivery price and underlying asset based on mark to market. It is also the same if the underlying asset is uncorrelated with interest rates. These people are investors or speculators, who seek to make money off of price changes in the contract itself. Archived from the original PDF on October 27, A futures contract is a legal agreement to buy or sell a particular commodity asset, or security at a predetermined price at a specified time in the future.

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Retrieved August 5, This establishes a baseline volume for the day to which all subsequent ticks can be related. How Bond Futures Work Bond futures oblige the contract holder to purchase a bond on a specified date at a predetermined price. Futures are also often used to hedge the price movement of the underlying asset to help prevent losses from unfavorable price change. Volume Reports and Liquidity. Retrieved 8 February It is always a good idea to get as much information as possible straight from the source from CME Group or in certain cases Ice Futures.
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Stop-loss can be defined as an advance order to sell an asset when it reaches a particular price point. The original use for futures was to hedge against uncertainty. Some sites and software only uses one number on the end, for example, one instead of '01'. In many cases, options are traded on futures, sometimes called simply "futures options". The margin requirement can vary by future, but it will appear when you get a quote for the contract you are interested in.
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By contrast, volume declines as the delivery date gets close. Now Definition: A futures contract is a contract between two parties where both parties agree to buy and sell a particular asset of specific quantity and at a predetermined price, at a specified date in future. If I buy a December Crude Oil contract I am saying that I will deliver x amount of barrels as stated in the contract by the settle date in December and the counter party of the futures contract will give the dollar amount specified when buying the contract. Convenience yields are benefits of holding an asset for sale at the futures price beyond the cash received from the sale. This is called the futures "convexity correction. In some cases, futures exchanges have created "mini" contracts to attract smaller traders.
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Rising prices and a declining volume or open interest indicate a pending change of direction. For example, ICE frozen concentrate orange juice contracts specify delivery locations as exchange-licensed warehouses in Florida, New Jersey, or Delaware, [7] while in the case of CME live cattle contracts, delivery is to exchange-approved livestock yards and slaughter plants in the Midwest. Here are some useful terms for futures: Contract Size: This specifies the number of units of the underlying future to be delivered. This means that there will usually be very little additional money due on the final day to settle the futures contract: only the final day's gain or loss, not the gain or loss over the life of the contract. Taxation Deficit spending.
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The fact that futures contracts are standardized and exchange-traded makes these instruments indispensable to commodity producers, consumers, traders and investors. Volume and open interest are integral measures to guide one's trading decision on the futures markets, but as always, these indicators should be considered in relation to extraneous market events. Volume: What's the Difference? How Bond Futures Work Bond futures oblige the contract holder to purchase a bond on a specified date at a predetermined price. These questions are designed to determine the amount of risk the broker will allow you to take on, in terms of margin and positions. These letters identify the product.
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What is a futures quantity:

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