Personal Finance & Money Stack Exchange
Personal Finance & Money Stack Exchange

Questions tagged [futures]

For questions relating to futures contracts.

A futures contract is

a standardized contract between two parties to buy or sell a specified asset of standardized quantity and quality for a price agreed upon today (the futures price or strike price) with delivery and payment occurring at a specified future date, the delivery date

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Could I make money off of the negative oil price?

The price of oil went negative around 1 PM Eastern time. You could get paid to take oil off the field. Is there a way to flare oil offsite without safety risks? Could we drive nonstop on the highway just to burn gasoline in order to get paid at the…
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What's funny about "He leveraged his @#% deep into soy beans and cocoa futures" in The Jerk (1979)?

Near the end of the comedy The Jerk (1979), a character explains how their family got rich: Father: All I did was take the money you sent home and embarked on a periodic investment, in a no-load mutual fund. Taj: He leveraged his ass deep into soy…
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Can I hedge my household expenses using the financial markets?

Apparently farmers can hedge against high raw material prices and low crop prices by using financial instruments such as forwards and futures. Can I use financial instruments to similarly hedge my household expenses against unfavorable prices? A…
Flux
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What happens if I do not honor a futures contract?

I have little knowledge about futures contracts. The recent negative price of crude oil spurred my curiosity about this stuff. I read this post about buying/selling futures contracts. According to this post, when I buy a futures contract, I enter…
William
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What is the difference between hedging and diversification? How does each reduce risk?

Hedging and diversification are both used for reducing financial risks, but what are the exact differences between these two?
Pooya Yazdani
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Why do futures traders write months in a strange way?

I was reading up a bit on futures and found that futures clearing merchants write months in a very unexpected way: Month Month Code January F February G March H April J May K June M July N August …
David says Reinstate Monica
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Why are options more popular than futures among retail investors?

I am puzzled as to why options seem to be more popular than futures among retail investors. Brokerage firms seem to emphasize their options offerings more than their futures offerings. On Robinhood, options trading is extremely popular, while…
Flux
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How are they earning money in the movie "Trading Places"?

I was watching a movie called "Trading Places" and it's about stocks. I need help because I don't understand stocks yet. A stock was for 142-146 that was the highest then when it reached the highest a guy said Sell 200 at 142. What does that mean? …
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Is it practical to take actual delivery on a futures contract, and what is the process?

Usually people trade futures speculatively, ie. they buy and sell contracts without actually delivering the goods. However, technically the futures are contracts for delivery of a certain amount of goods. Can't you then simply buy a gold futures…
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What does it mean to invest in potatoes?

There is an amusing thread on Reddit where people discuss what they would do with an unlimited supply of potatoes: http://www.reddit.com/r/AskReddit/comments/37yawp/you_have_an_almost_infinite_supply_of_potatoes/ Some of the comments discuss…
Dai
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Why trade futures if you have options?

This article explains the difference between futures and options. It seems a futures contract is an obligation, while an option is a right (not an obligation). If this is true, why would anybody ever deal with futures? An obligation is always less…
Victor123
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Does a high demand for long commodities Futures push up the underlying spot price?

Let's take a commodity as an example - oil. Suppose there is suddenly a high demand for a 30-day oil futures contract. Will that push up the spot price on oil? I would guess that this would affect the spot price, regardless on whether the purchasers…
djcredo
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Do futures have premium in the price, just as options do?

Looking at Wikipedia's the pricing of futures, I wonder if entering into a futures contract requires one to pay premium just as entering into an option contract? In other words, is the premium of a futures contract always zero? Is futures price…
Tim
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What are futures and how are they different from options?

As a form of investment there are contracts to buy commodities at a specific time in the future or at a specific price. How is this different from an option to buy a share?
Zephyr
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How are futures contracts setup at an exchange?

I'm having a hard time wrapping my head around how the actual contracts are structured at an exchange. Here are my questions: If an exchange facilitates the trading of futures contracts and nobody intends to take delivery of the product, nor do…
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