The Investment Blog

Futures where speculators put up a initial margin are essentially leveraged positions, aren’t they, where the losses are protected with maintenance margins? Do futures exchanges put up the rest of the money with interest payable? Is that how it works?

John always says such dumb stuff in such a pompous manner.

No, John, your broker doesn’t put up margin for you. Imagine paying $8 a round turn and having your broker put up 95% of the notional value of an S&P contract. That would be one cheap loan.

The key is not to think about the notional value of the contract at all. Futures contracts are just risk units and your margin deposit covers the short-term risk of the contract. For some contracts it’s not even clear what the notional size is, e.g., is a Eurodollar contract a $1M notional contract or just the interest on $1M for three months or something in between? If you take delivery under a futures contract you get invoiced for the underlier and your margin account is just to settle price differences.

What are some online platforms/brokers that offer the ability to trade futures?

T & K Futures and Options Inc.

What is comex? Where does the spot price come from? Are these different from gold and silver futures? Does the comex have to hold the physical metal or do the futures have to hold it? Can someone give an explanation of the different markets and terms? Thanks!

The spot price is the current market price or more succinctly the price of the last trade. Futures are contracts to trade at an agreed upon price in the future and therefore have a value dependent on the probable future price versus that of the contract and are traded as such with the associated speculation of the future price. The difference between the current spot price and the contracted price of the futures contract, the time to maturity and the volatility of the price is used to estimate the probable price at maturity and hence estimate the value of the futures contract. The spot price is for the commodity itself, futures are a derivative product and is a related but separate market.

Comex is the Commodity Exchange, a division of the New York Mercantile Exchange, they don’t hold anything, they just bring buyers and sellers together.

I know the stock indexes have futures prices but what about for an individual stock? Where can I find it?

You can check this through your futures broker, or at http://www.onechicago.com/

What is the difference between investing in the stock market and futures and options trading?

Let’s see:

Investing in the stock market means that you are buying an ownership interest in a corporation which provides valuable goods and services. If you invest broadly enough in stock markets, you are betting that global growth will happen during the holding period which accrues to the owners of global corporations.

Trading in futures means that you think that pork bellies are going to go either up or down faster than they would go in the other direction which would cause you to be closed out.

Trading in options means either you are an amateur looking for increased leverage on a directional bet in just about any market anywhere or you have some opinion about volatility which is different from the price of volatility expressed in the option.

It is now January. The current interest rate is 4%. The June futures price for gold is $946.30, while the December futures price is $952.

What is the price for December futures using the parity relationship?

using continuous compounding and assuming 6 months, e^(.04/2) * 952 = 971.232

Of all the exchange traded futures contracts out there, which is the most liquid?

Crude oil

I am going to apply for the Florida Bright Futures scholarship. How much money will i get if i have a B average for all four years of high school.

I found some info about getting this scholarship online in this scholarship database – scholarships.onlinewebshop.net