2 Futures and Forward markets Summary Contract Specifications a Margin accounts Pattern of futures prices Charles cao
1 Charles Cao 2. Futures and Forward Markets ◼ Summary ◼ Contract Specifications ◼ Margin Accounts ◼ Pattern of Futures Prices
Contract specifications The asset a The contract size Delivery arrangement Delivery month a Price quotes Position limit (1000, 300 Charles cao 2
2 Charles Cao Contract Specifications ◼ The asset ◼ The contract size ◼ Delivery arrangement ◼ Delivery month ◼ Price quotes ◼ Position limit (1000, 300)
Corn Futures Trading Unit 5,000bu Deliverable Grades No. 2 Yellow at par and substitutions at differentials established by the exchange Price Quote Cents and quarter-cents/bu Tick Size 1/4 cent/bu ($12.50 /contract) Daily price Limit 12 cent/bu($600 /contract)above or below the previous day s settlement price (expandable to 18 cent/bu) Contract Months DeC, Mar, May, Jul, Sep Ticker Symbol C Charles cao 3
Trading Unit 5,000 bu Deliverable Grades No. 2 Yellow at par and substitutions at differentials established by the exchange Price Quote Cents and quarter-cents/bu Tick Size 1/4 cent/bu ($12.50/contract) Daily Price Limit 12 cent/bu ($600/contract) above or below the previous day’s settlement price (expandable to 18 cent/bu) Contract Months Dec, Mar, May, Jul, Sep Ticker Symbol C Corn Futures Charles Cao 3
Contract specifications Closing out positions Enter into a contract that is the opposite of the original contract a An example March 6, long one July corn futures contract April 12, short one July corn futures contract Charles cao
4 Charles Cao Contract Specifications ◼ Closing out positions ◼ Enter into a contract that is the opposite of the original contract ◼ An example: ◼ March 6, long one July corn futures contract ◼ April 12, short one July corn futures contract
Contract specifications Closing out positions(cont,) Majority of the futures contracts do not lead to delivery Your gain or loss is determined by the change in the futures prices between March 6 and april 12 Charles cao
5 Charles Cao Contract Specifications ◼ Closing out positions (cont.) ◼ Majority of the futures contracts do not lead to delivery ◼ Your gain or loss is determined by the change in the futures prices between March 6 and April 12