What is a futures example in numbers. Futures - what is it, how to trade on the stock market

futures contract or futures contract- this is a contract for the sale of an underlying asset (goods, securities, etc.), which is concluded on the exchange.

When concluding a futures contract, the parties to the transaction being concluded (the seller and the buyer) agree only on the price and delivery time. The remaining parameters of the asset, such as: quantity, quality, packaging, labeling, etc., are agreed in advance and are written in the specification of the exchange contract. Note that these parameters of a futures transaction are standard for this trading platform.

The parties are liable to the exchange until the execution of the futures.

Types of futures

In practice, the following types of futures contracts are distinguished:

delivery futures;

settlement (non-deliverable) futures.

Deliverable futures

A deliverable futures contract assumes that on the contract execution date, the buyer must purchase and the seller must sell the amount of the underlying asset specified in the specification. Delivery is carried out at the estimated price fixed on the last date of the auction.

In the event of the expiration of this contract, but the lack of goods from the seller, the exchange imposes a fine.

Settlement (non-deliverable) futures

Settlement (non-deliverable) futures assumes that only cash settlements are made between the participants in the amount of the difference between the contract price and the actual price of the asset on the contract execution date without physical delivery of the underlying asset.

For example, Si (futures for the dollar-ruble) and RTS (futures for the index of our market) are settlement futures, there is no delivery for them, only settlement in cash.

Settled (non-deliverable) futures are usually used to hedge the risks of changes in the price of the underlying asset or for speculative purposes.

Purpose of the future

At its core, a futures is an ordinary exchange instrument that can be sold at any time. That is, it is not necessary to wait for the expiration date of the futures transaction. Most traders just want to make money on futures, and not buy something in reality with the help of delivery. For traders, futures for indices and stocks are of the greatest interest.

At the same time, large companies are interested in reducing their risks (hedging), especially in commodity supplies, so they are one of the main players in this market.

How futures work

Like any other exchange asset, it has its price, volatility, and the essence of traders' earnings is to buy cheaper and sell more expensive.

When a futures contract expires, there may be several options.

The parties remain with their money or one of the parties makes a profit.

If by the time of execution the price of the goods increases, the buyer receives a profit, since he acquired the contract at a lower price.

Accordingly, if at the time of execution the cost of the goods decreases, the seller receives a profit, since he sold the contract at a higher price, and the owner receives some loss, since the exchange pays him an amount less than the one for which he bought the futures contract.

Who issues futures

Here the following question arises: who is the issuer, that is, puts futures into circulation?

With shares, everything is extremely simple, because they are issued by the enterprise to which they originally belonged. At the initial placement, they are redeemed by investors, and then they begin to circulate on the secondary market, that is, on the stock exchange.

Further, a future is, in fact, a contract that is entered into by two parties to the transaction: the buyer and the seller. After a certain period of time, the first undertakes to buy from the second a certain amount of the underlying product, whether it be shares or raw materials.

Thus, traders themselves are issuers of futures, it's just that the exchange standardizes the contract they conclude and strictly monitors the fulfillment of duties.

Difference between forward and futures contracts

Futures can be viewed as a standardized type of forward (deferred contract) that is traded on an organized market with mutual settlements centralized within the exchange.

The main difference between forward and futures contracts is that a forward contract is a one-time OTC transaction between a seller and a buyer, while a futures contract is a recurring offer traded on an exchange.

The difference between futures and options

The key criterion for distinguishing futures from options is that the owner of the futures must necessarily fulfill the conditions under the futures agreement. In turn, the second financial instrument - - allows the party to the transaction not to fulfill the conditions specified in the contract.

For example, do not sell shares if they have fallen in price compared to the price at the time of their purchase.

Futures specification

One of the key elements of futures transactions is specification. A futures specification is a document approved by the exchange, which sets out the main basic conditions of a futures contract.

So, the following information is indicated in the specification of the futures:

name of the contract;

code name (abbreviation);

type of contract (settlement/delivery);

contract size - that is, the amount of the underlying asset per one contract;

terms of the contract;

date of delivery;

minimum price change;

the cost of the minimum step.

Name of the futures contract

The name of the futures contract has the format TICK-MM-YY, where

TICK - ticker of the underlying asset;

MM - futures execution month;

YY - futures execution year.

For example, SBER-11.18 is a futures contract for Sberbank shares with settlement in November 2018.

There is also an abbreviated name of the future, which has the format CC M Y, where

CC - short code of the underlying asset of two characters;

M - letter designation of the month of execution;

Y is the last digit of the year of execution.

For example, SBER-11.18 - a futures contract for Sberbank shares in the abbreviated name looks like this - SBX5.

Execution of a futures contract

The execution of a futures contract is carried out at the end of the contract, either by performing the delivery procedure or by paying the difference in prices. It is executed at the settlement price fixed on the day the contract is executed. The underlying asset is often delivered through the same exchange (and sometimes through the same section) on which the futures contract is traded.

Futures on the Russian market

There are three main sections on the MICEX exchange where there are futures

1.Stock section:

shares (only the most liquid);

indices (RTS, MICEX, BRICS countries);

volatility stock market MICEX.

2.Money section:

currency pairs (ruble, dollar, euro, pound sterling, Japanese yen, etc.);

interest rates;

OFZ basket;

Eurobond basket RF-30.

3.Commodity section:

raw sugar;

precious metals (gold, silver, platinum, palladium)

• average price of electricity.

Benefits of trading futures

Futures trading enables traders to take advantage of numerous benefits.

These include, in particular:

access to a large number of trading instruments, which allows you to significantly diversify your portfolio of assets;

the futures market is very popular - it is liquid, and this is another significant plus;

When trading futures, a trader does not buy the underlying asset itself, but only a contract for it at a price that is significantly lower than the value of the underlying asset. It's about about the guarantee. This is the kind that is charged by the exchange. Its size varies from two to ten percent of the value of the underlying asset.

Still have questions about accounting and taxes? Ask them on the accounting forum.

Futures (futures contract): details for an accountant

• Accounting for an entity's acquisition of futures

  Next position: Conclusion and closing of futures contracts are reflected exclusively in off-balance accounting..., on a special off-balance account "Futures contracts". We believe that it is also possible ... an asset). Futures contracts can be valued at their conclusion prices. Futures contracts are deducted from the off-balance sheet ... or the variation margin on futures contracts is written off (not including payment costs ... accounting and reporting of operations under futures contracts should be reflected in the accounting policy ...

• Brokerage account in a foreign bank: qualification from the point of view of Russian legislation on currency regulation and currency control

  And stocks, CFDs, futures, options, other derivatives and financial...

• Income tax in 2018: clarifications of the Ministry of Finance of Russia
• Review of letters from the Ministry of Finance of the Russian Federation for November 2018

  AT Russian Federation, for non-deliverable futures, options and swap contracts traded...

• Review of letters from the Ministry of Finance of the Russian Federation for January 2017
• income tax in 2017. Clarifications of the Ministry of Finance of Russia

  A Russian clearing organization is recognized as a clearing member of income on deliverable futures contracts according to...

• The Moscow Exchange stated that it did not apply to the Central Bank for the registration of a bitcoin futures

  In order to register a futures for the bitcoin index, the Central Bank reported to RNS ... allowed the Moscow Exchange to launch trading in a futures for bitcoin. “We are not... The Bank of Russia is behind the registration of a cryptocurrency futures specification, therefore, to talk about... requests to start trading in crypto assets or futures for the corresponding indices, since... . Formally speaking, the admission to trading of a futures on any index, in ... a possible underlying asset for a new futures, the NYSE Bitcoin Index was considered ...

• Bidding is appropriate: FAS has found a new way to contain the rise in gasoline prices

  By expanding trading in deliverable futures. This, perhaps, will make it possible to refuse ... the introduction of a damping excise tax. Future behind futures Anatoly Golomolzin added that the development of... trading in deliverable futures (an exchange contract in which in advance... futures trading (that is, trading in futures) and the task is to eliminate all... the market "BCS Nikita Silkin, futures allow to reduce risks of price fluctuations...

• Experts Predict Bitcoin Price Growth This Week

  Options (CBOE) plans to launch trading in futures for the second largest capitalization in ... approval by the US Commodity Futures Trading Commission (CFTC). According to sources... at the time of the launch of Bitcoin futures last December... the exchange said it plans to launch ETH futures before the end of the year...

  On the London Stock Exchange ICE, the price of a futures contract for Brent crude oil with ... the exchange was given $49.85. July futures for WTI oil, meanwhile... the ICE exchange in London, the price of a futures contract for this brand of oil from... . Then the June futures of WTI oil also suffered a fall. They're in...

• Economic forecast - what will happen to the ruble, dollar and oil prices in May

  A game to lower the price of oil futures, reminiscent of the events of late 2008... a game to increase the price of oil futures is premature. On March 29, a barrel was worth ... they played down oil futures quotes, so in April for ... it plays against oil futures quotes. Our forecast: in May the players...

• The ruble behaves outside the box on Black Friday

  The strength to recover: futures on the RTS index lost 1000 ... demand. Since last Friday, Brent futures have lost 7%, WTI ... 2018 lows on Friday. Futures for Brent oil to... ; low since December 2017. Futures for North American WTI blend fell...

• The Central Bank cut the key rate for the fifth time in a row

  Invest" Kirill Tremasov. Futures quotes illustrated the likelihood of a rate cut on... Moscow Exchange. Based on the quotations of futures for the RUONIA rate, the market estimated... the rates of the Central Bank. Based on RUONIA futures quotes, the market expected a decline...

5 (99.93%) 1183 vote[s]

Surely you have already noticed on various financial sites, where there are currency quotes and economic news, a special section "Futures". However, there are many varieties of them. In this article, we will talk about what Futures are, why they are needed and what they are.

1. What is Futures

Futures(from the English "futures" - the future) is one of the liquid financial instruments that allows you to buy / sell goods in the future at a pre-negotiated price today

For example, buying December futures in the summer, you will be delivered this commodity in December at the price you paid in the summer. For example, it can be stocks, currency, goods. The end of the contract is called expiration.

They have been widely used since the 1980s. Futures are just one of the speculations for many traders these days.

The main purpose of futures is to hedge risks

For example, you own a large block of shares in a company. The stock market is going down and you want to get rid of them. But selling such a large volume in a short period of time is problematic, as this can cause a collapse. Therefore, you can go to the futures market and open a position for a fall.

Also, a similar scheme is used in periods of uncertainty. For example, there are some financial risks. They may be connected with the elections in the country, with some uncertainties. Instead of selling all your assets, you can open opposite positions in the futures market. Thus, protecting your investment portfolio from losses. If the futures will fall, then you will earn on it, but lose on shares. Similarly, if stocks rise, you will earn on this, but lose on futures. You kind of support the "status quo".

Note 1

In textbooks, you can see another name - "future contract". In fact, this is the same thing, so you can say whichever is more convenient for you.

Note 2

A forward is very similar in definition to a futures contract, but is a one-time transaction between a seller and a buyer (private arrangement). Such a transaction is carried out off the exchange.

Any futures must specify the expiration date, its volume (contract size) and the following parameters:

• name of the contract
• code name (abbreviation)
• contract type (settlement/delivery)
• contract size - the amount of the underlying asset per one contract
• terms of the contract
• minimum price change
• minimum step cost

Nobody issues futures like stocks or bonds. They are an obligation between the buyer and the seller (i.e., in fact, traders on the exchange create them themselves).

2. Types of futures

Futures are divided into two types

1. Estimated
2. Deliverable

With the first, everything is simpler, that nothing will be delivered. If they are not sold before the execution, the transaction will be closed at the market price on the last day of trading. The difference between the opening and closing prices will be either profit or loss. Most Futures are settled.

The second type of futures is deliverable. Even by the name it is clear that at the end of time they will be delivered in the form of a real purchase. For example, it could be stocks or currencies.

In fact, Futures is an ordinary exchange instrument that can be sold at any time. You don't have to wait until the due date. Most traders strive to simply earn money, and not to buy something in reality with delivery.

For a trader, futures for indices and stocks are of the greatest interest. Large companies are interested in reducing their risks (hedging), especially in commodity deliveries, so they are one of the main players in this market.

3. Why Futures are needed

You may have a logical question, why do we need Futures when there are base prices. The history of the issue of their appearance goes back to the distant 1900s, when grain was sold.

In order to insure against strong fluctuations in the cost of goods, the price of future products was laid in the winter. As a result, regardless of the yield, it was possible for the seller to buy at an average price, and for the buyer to sell. This is a kind of guarantee that one will have something to eat, the other will have money.

Also, a futures contract is needed to predict the future price, more precisely, what the bidders expect it to be. There are the following definitions:

1. Contango - an asset is trading at a lower price than the futures price
2. Backwardation - an asset is trading at a higher price than the futures price
3. Basis is the difference between the value of an asset and a futures contract

4. Trading Futures - how and where to buy

When buying a futures on the Moscow Exchange, you need to deposit your own funds for approximately 1/7 of the purchase price. This part is called "warranty provision". Abroad, this part is called margin (in English "margin" - leverage) and can be much smaller (on average 1/100 - 1/500).

The conclusion of a supply contract is called "hedging".

In Russia, the most popular futures is the RTS index.

You can buy futures from any Forex broker or on the currency section of the MICEX. At the same time, free "leverage" is given, which allows you to play for decent money, even with a small capital. But it is worth remembering about the risks of using leverage.

Best Forex Brokers:

Best brokers for MICEX (FORTS section):

5. Futures or Stocks - what to trade on

What to choose for trading: futures or stocks? Each of them has its own characteristics.

For example, by purchasing a share on it, you can receive annual dividends (as a rule, these are small amounts, but nevertheless, there is no extra money). Plus, you can hold shares for as long as you like and act as a long-term investor and still receive at least a small, but percentage of profit every year.

Futures is a more speculative market and it hardly makes sense to hold them here for more than a few months. But they discipline the trader more, because here you have to think about a shorter period of the game.

Commissions for operations on futures are about 30 times lower than on stocks, and plus, leverage is issued free of charge, unlike the stock market (here the loan will cost 14-22% per annum). So for fans of scalping and intraday trading, they are the best fit.

In the stock market, you cannot short (be short) some stocks. Futures don't have this problem. You can buy both long and short all assets.

6. Futures on the Russian market

There are three main sections on the MICEX exchange where there are futures

1. Stock
   • Shares (only the most liquid)
   • Indices (RTS, MICEX, BRICS countries)
   • Volatility of the MICEX stock market
2. Monetary
   • Currency pairs (ruble, dollar, euro, pound sterling, Japanese yen, etc.)
   • Interest rates
   • OFZ basket
   • Eurobond basket RF-30
3. Commodity
   • raw sugar
   • Precious metals (gold, silver, platinum, palladium)
   • Oil
   • The average price of electricity

The name of the futures contract has the format TICK-MM-YY , where

• TICK - ticker of the underlying asset
• MM - futures execution month
• YY - futures settlement year

For example, SBER-11.18 is a futures contract for Sberbank shares with settlement in November 2018.

There is also an abbreviated name of the future, which has the format CC M Y, where

• CC - two-character short code of the underlying asset
• M - letter designation of the month of execution
• Y - the last digit of the year of execution

For example, SBER-11.18 - a futures contract for Sberbank shares in the abbreviated name looks like this - SBX5.

The MICEX adopted the following letter designations for months:

• F - January
• G - February
• H - March
• J - April
• K - May
• M - June
• N - July
• Q - August
• U - September
• V - October
• X - November
• Z - December

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Futures or futures contract is one of the most popular instruments on the stock exchange. Futures trading occupies a significant segment of the exchange market.

The secret of the demand for this financial instrument lies in its high liquidity and the ability to choose from a large number of investment strategies. For novice traders, this segment of exchange trading seems complicated and risky, but for experienced players it offers many opportunities, including risk hedging.

Futures contract. What it is?

So what are futures? The term originated from English word future meaning "future". This emphasizes the fact that the contract is for the actual completion of the transaction in the future.

A futures contract is an agreement in which the current market price of a commodity or asset is fixed, but the transaction itself will be made on a specific date in the future.

The essence of the agreement is that the parties to the transaction come to a consensus on the price of the goods and at the same time agree on a deferral of payments under the contract. This type of agreement is very convenient for each of the parties, since it insures against situations where some serious changes in the market situation will provoke fluctuations in market prices.

The purpose of such a contract is an attempt to reduce risks, maintain planned profits and obtain a guarantee of delivery of goods. A futures contract saves a market participant from urgent search for someone to sell or buy goods from. The exchange acts as a guarantor of the fulfillment of the terms of the transaction.

Example of a futures contract

A traditional example of a futures contract would be a deal between an agricultural producer and a buyer. The farmer assumes for what amount he wants to sell his product in order to recoup the costs of growing and make a profit. If this amount is approximately equal to the current market value, he signs a futures contract with the buyer for the supply of agricultural products at the current price, but after a certain period of time - for example, 6-9 months, that is, as long as it takes to grow a crop.

If the price of the product falls during this time (for example, the year will be fruitful and there will be an oversupply of products), the manufacturer will still be able to sell the goods at the price specified in the contract. But even in the opposite situation, if the year was lean and the prices for products rose, the manufacturer will have to sell at a disadvantageous now, but pre-specified in the contract price. The whole essence and meaning of the futures is to fix the price of the goods.

The assets of a futures transaction, in addition to real goods, are stocks, bonds, currency pairs, interest rates, stock indices, etc.

Futures trading. What are the advantages?

The high popularity of futures on the exchange is not accidental, the advantages of this financial instrument are as follows:

1. Possibility of broad portfolio diversification valuable papers for the trader through access to a large number tools.
2. High liquidity of contracts and the ability to choose different financial strategies: risk hedging, various speculative and arbitrage transactions.
3. Commission for the purchase of futures is lower than in the stock market.
4. Collateral in the amount of usually no more than 10% of the value of the underlying asset allows you to invest in futures contracts not the full value, but only a part, but at the same time use the leverage that arises when using a futures contract.

However, the investor needs to keep in mind that the amount of collateral may vary throughout the entire term of the contract, so it is important not to lose sight of futures quotes, monitor these indicators and close positions on time.

The futures price is also unstable. Its fluctuations allow you to track the futures chart. During the circulation period, the value is constantly changing, although it depends directly on the value of the underlying asset. The situation when the price of the futures exceeds the value of the asset is called "contango", while the term "backwardation" means that the futures turned out to be cheaper than the underlying asset. On the expiration date, there will be no such price difference between the futures and the asset itself.

Types of futures contracts

There are two main types of futures contracts: settlement and delivery.

Futures contracts gave rise to the commodity market. The participants in the transaction agreed on a price that suited both parties, and on a deferred payment. This type of transaction guaranteed both parties protection from sudden changes in market sentiment. Therefore, initially only supply contracts were in effect, that is, those involving the delivery of real goods.

There are delivery contracts on the current Russian derivatives market that ensure the delivery of shares directly, but there are quite a few of them. These are futures for shares of Gazprom, Sberbank, Rosneft, for some types of currencies and options

Today, futures contracts are mostly settled and do not impose obligations to deliver goods. Traders prefer to trade assets that are more convenient for them (currencies, RTS index, stocks, etc.). The fundamental difference between settlement futures and delivery futures is that there is no delivery of a commodity or underlying asset on the last day of the contract. On the expiration date, profits and losses are redistributed between the parties to the contract.

The conditions for concluding a futures contract are standard, they are approved by the exchange. In addition to this scheme, for each asset, personal conditions(or specification), which includes the name, ticker, type of contract, size / number of units, date and place of delivery, method, minimum price step and other nuances. More information about the specification of any futures on the Forts market can be found on the Moscow Exchange website.

The difference between futures and options is that the former oblige the seller to sell the asset, and the buyer to purchase the goods in the future at a fixed price. In both cases, the exchange is the guarantor of the transaction.

Today, exchange trading experts admit that in many respects it is futures contracts that set the pace for the development of the economy, setting the bar for supply and demand in the market in advance.

Futures is a derivative financial instrument, a contract to buy/sell an underlying asset on a certain date in the future, but at the current market price. Accordingly, the subject of such an agreement (underlying asset) can be stocks, bonds, goods, currency, interest rates, inflation, weather, etc.

A simple example. The farmer planted wheat. The price for this product on the market today, conditionally, is 100 rubles per ton. At the same time, forecasts come from all sides that the summer will be good, and the harvest in the fall will be excellent, which will invariably cause an increase in supply in the market and a fall in prices. The farmer does not want to sell grain in the autumn at 50 rubles per ton, so he agrees with a certain buyer that he will be guaranteed to supply 100 tons of grain in 6 months, but at the current price of 100 rubles. That is, our farmer thus acts as a seller of a futures contract.

Fixing the price of goods that will be delivered after a certain period, at the time of the conclusion of the transaction - this is the meaning of the futures contract.

Derivative financial instruments appeared along with trading. But initially it was a kind of unorganized market based on oral agreements between, for example, merchants. The first contracts for the supply of goods at some point in the future appeared with the letter. So, already on the cuneiform tablets of the centuries BC, which were found during excavations in Mesopotamia, one can find a certain prototype of the futures. By the beginning of the 18th century, the main types of derivative financial instruments appeared in Europe, and capital markets acquired the features of modern ones.

In Russia today you can trade futures on the derivatives market of the Moscow Exchange - FORTS, where one of the most popular instruments is the futures on the RTS index. The volume of the futures market throughout the world today significantly exceeds the volume of real trading in underlying assets.

BCS is the market leader in terms of turnover on the derivatives market FORTS. Earn with us!

Technical details

Each futures contract has specification- a document fixed by the exchange itself, which contains all the main conditions of this contract: - name; - ticker; - type of contract (settlement/delivery); - size (number of units of the underlying asset per one futures); - term of application; - date of delivery; - minimum price change (step); - the cost of the minimum step.

Thus, the futures on the RTS index is now traded under the ticker RIZ5: RI - code of the underlying asset; Z - code of the month of execution (in this case December); 5 - code of the year of contract execution (last digit).

Futures contracts are "settlement" and "delivery". The delivery contract implies the delivery of the underlying asset: we agreed to buy gold at a certain price in 6 months - get it, everything is simple here. The settlement futures does not imply any delivery. Upon the expiration of the contract, profit/loss between the parties to the contract is recalculated in the form of accrual and write-off Money.

Example: We bought 1 futures on the Russian RTS index, assuming that by the end of the contract the domestic index will rise. The circulation period has ended, or, as is often said, the expiration date has come ( expiration date), the index has grown, we have accrued profit, no one has delivered anything to anyone.

The maturity of a futures is the period during which we can resell or buy this contract. When this period ends, all participants in transactions with the selected futures contract are required to fulfill their obligations.

The futures price is the price of the contract for this moment. During the life of the contract, it changes, up to the expiration date. It is worth noting that the price of a futures contract differs from the price of the underlying asset, although it has a dense direct dependence on it. Depending on whether the futures is cheaper or more expensive than the price of the underlying asset, there are situations called "contango" and "backwardation". That is, the current price includes some circumstances that may occur, or the general mood of investors about the future of the underlying asset.

Benefits of Futures Trading

The trader gets access to a huge number of instruments traded on different exchanges around the world. This provides opportunities for broader portfolio diversification.

Futures have high liquidity, which makes it possible to apply various strategies.

Reduced commission compared to the stock market.

The main advantage of a futures contract is that you do not have to shell out as much money as you would if you were buying (selling) the underlying asset directly. The fact is that when you make a transaction, you use a guarantee collateral (GO). This is a refundable fee that the exchange charges when opening a futures contract, in other words, a certain deposit that you leave when making a transaction, the amount of which depends on a number of factors. It is easy to calculate that the leverage that is available in operations with futures allows you to increase the potential profit many times over, since GO is most often noticeably lower than the value of the underlying asset. However, do not forget about the risks.

It is important to remember that GO is not a fixed value and can change even after you have already bought a futures contract. Therefore, it is important to monitor the status of your position and the level of GO so that the broker does not close your position at the moment when the exchange slightly increased the GO, and there are no additional funds on the account at all. The BCS company provides its customers with the opportunity to use the service. Access to trading on the derivatives market is provided on the QUIK or MetaTrader5 terminals.

Trading Strategies

One of the main advantages of futures is the availability of various trading strategies. .

The first option is risk hedging. Historically, as we wrote above, it was this option that gave rise to this type of financial instrument. The first underlying asset was various products Agriculture. Not wanting to risk their income, farmers sought to conclude contracts for the supply of products in the future, but at the prices agreed now. Thus, futures contracts are used as a way to reduce risks by hedging both real activity (production) and investment operations, which is facilitated by fixing the price right now for the asset we have chosen.

Example: we are now seeing significant fluctuations in the foreign exchange market. How to protect your assets during periods of such turbulence? For example, you know that in a month you will receive revenue in US dollars, and you do not want to take on the risk of changes in the exchange rate during this period of time. To solve this problem, you can use a futures contract for a dollar / ruble pair. Let's say you expect to receive $10,000 and the current exchange rate suits you. In order to hedge against an unwanted price change, you sell 10 contracts with the corresponding expiration date. Thus, the current market rate is fixed, and any change in it in the future will not affect your account. The position is closed immediately after you receive real money.

Or another example: You have a portfolio of Russian blue chips. You plan to hold the shares long enough, more than three years, to be exempt from paying personal income tax. But at the same time, the market has already risen quite high and you understand that a downward correction is about to happen. You can sell futures for your shares or the entire MICEX index as a whole, thereby insuring against a fall in the market. If the market declines, then you can close your short positions in futures, thereby leveling the current losses on the securities available in the portfolio.

Speculative transactions. The two main factors contributing to the growing popularity of futures among speculators are liquidity and large leverage.

The task of the speculator, as you know, is to profit from the difference in the purchase and sale prices. Moreover, the potential for profit here is maximum, and the terms of holding open positions are minimal. At the same time, in favor of the speculator, there is also such a moment as a reduced commission compared to the stock market.

Arbitration operations are another option for using futures, the meaning of which is to profit from the "game" on the calendar/intercommodity/intermarket spreads. .

To learn more about futures trading, you can read books like Tod Lofton's Futures Trading Fundamentals. In addition, you can visit various.

BCS Express

And the current reality of trading these instruments.

What is a futures in simple words

is a contract for the purchase or sale of an underlying asset within a predetermined timeframe and at an agreed price, which is fixed in the contract. Futures are approved on the basis of standard conditions, which are formed by the exchange itself, where they are traded.

For each underlying asset, all conditions (delivery time, place, method, etc.) are set separately, which helps to quickly sell assets at a price close to the market.

Thus, for participants in the secondary market, there is no problem finding a buyer or seller.

In order to prevent the buyer or seller from refusing to fulfill obligations under the contract, a condition is made for the provision of collateral by both parties.

Now it is not the economic situation that dictates the price of futures contracts, but they, by forming the upcoming price of supply and demand, set the pace for the economy.

What is a futures or futures contract

(from the English word future - the future) is a contract between a seller and a buyer that provides for the delivery of a specific commodity, stock, or service in the future at a price fixed at the time the futures are entered into. The main purpose of such instruments is to reduce risks, secure profits and guarantee delivery "here and now".

Today, almost all futures contracts are settled, i.e. without obligation to deliver actual goods. More on this below.

First appeared on the commodity market. Their essence lies in the fact that the parties agree on a deferred payment for the goods. However, when concluding such an agreement, the price is negotiated in advance. This type of contracts is very convenient for both parties, as it allows avoiding situations when sharp fluctuations in quotations in the future will provoke additional problems in setting prices.

• , as financial instruments, are popular not only among those who trade in various assets, but also among speculators. The thing is that one of the varieties of this contract does not involve a real delivery. That is, the contract is concluded for the goods, but at the time of its execution, this goods is not delivered to the buyer. In this, futures are similar to other financial market instruments that can be used for speculative purposes.

What is a futures contract and what is its purpose? Now we will reveal this aspect in more detail.

“And for example, I want a futures contract for some stocks that are not on the broker’s list,” this is a classic understanding of the forex market.

Everything is a little different. It is not the broker who decides which futures to trade and which not. This is decided by the trading platform on which trading is conducted. That is the stock market. Sberbank shares are traded on the MB - a very liquid chip, so the exchange provides the opportunity to buy and sell Sberbank futures. Again, let's start with the fact that all futures are actually are divided into two types:

• Estimated.
• Deliverable.

A settled future is a future that has no delivery. For example Si(futures for dollar-ruble) and RTS(futures on the index of our market) these are settled futures, there is no delivery for them, only settlement in cash. Wherein SBRF(futures on Sberbank shares) — deliverable futures. It will be the delivery of shares. The Chicago Stock Exchange (CME), for example, has deliverable futures on grain, oil and rice.

That is, by buying oil futures there, they can actually bring barrels of oil to you.

We simply do not have such needs in Russia. To be honest, we have a whole sea of ​​"dead" futures, for which there is no turnover at all.

As soon as there is a demand for deliverable futures for oil on the MB - and people are ready to take out barrels with Kamaz - they will appear.

Their fundamental difference lies in the fact that when the expiration date comes (the last day of circulation of the futures), there is no delivery under settlement contracts, and the holder of the futures simply remains "in the money". In the second case, the actual delivery of the underlying instrument takes place. There are only a few delivery contracts in the FORTS market, and all of them ensure the delivery of shares. As a rule, these are the most liquid shares of the domestic stock market, such as:, and others. Their number does not exceed 10 items. Deliveries on oil, gold and other commodity contracts do not occur, that is, they are calculated.

There are small exceptions

but they concern purely professional instruments, such as options and low-liquidity currency pairs ( banknotes CIS countries, except hryvnia and tenge). As mentioned above, the availability of deliverable futures depends on the demand for their delivery. Sberbank shares are traded on the Moscow Exchange, and this is a liquid chip, so the exchange provides an opportunity to buy and sell futures for this share with delivery. It's just that we, in Russia, do not have the need for such a prompt supply of gold, oil and other raw materials. Moreover, our exchange has a huge number of "dead" futures for which there is no turnover at all (futures for copper, grain and energy). This is due to the banal demand. Traders do not see any interest in trading such instruments and, in turn, choose assets that are more familiar to them (the dollar and stocks).

Who issues futures

The next question that a trader may have is: who is the issuer, that is, puts futures into circulation.

With shares, everything is extremely simple, because they are issued by the enterprise to which they originally belonged. At the initial placement, they are redeemed by investors, and then they begin to circulate on the secondary market we are familiar with, that is, on the stock exchange.

In the derivatives market, it is still easier, but it is not entirely obvious.

Futures is, in fact, a contract that is entered into by two parties to the transaction: buyer and seller. After a certain period of time, the first undertakes to buy from the second a certain amount of the underlying product, whether it be shares or raw materials.

Thus, traders themselves are issuers of futures, it’s just that the exchange standardizes the contract they conclude and strictly monitors the fulfillment of obligations - this is called.

• It begs the next question.

If everything is clear with stocks: one supplies shares, and the other acquires them, then how should things be with indices in theory? After all, a trader cannot transfer the index to another trader, since it is not material.

This reveals another subtlety of the futures. At the moment, for all futures, , which is the profit or loss of the trader, is calculated relative to the price at which the transaction was concluded. That is, if after the sale transaction the price began to grow, then the trader who opened this short position will begin to suffer losses, and his counterparty, who bought this futures from him, on the contrary, will receive a profitable difference.

A fixed-term contract is actually a dispute, the subject of which can be anything. For indices, hypothetically, the seller should simply provide an index quote. Thus, you can create a future for any amount.

In the US, for example, futures for the weather are traded.

The subject of the dispute is limited only by the common sense of the organizers of the exchange.

Do such contracts make any financial sense?

Of course they do. The same American weather futures depends on the number of days in the heating season, which directly affects other sectors of the economy. One way or another, the market continues to fulfill one of its main tasks: the accumulation and redistribution of funds. This factor plays a huge role in the fight against inflation.

The history of futures

The futures market has two legends or two sources.

• Some believe futures originated in the former capital Japan city Osaka. Then the main traded "instrument" was rice. Naturally, sellers and buyers wanted to insure themselves against price fluctuations, and this was the reason for the emergence of such contracts.
• The second story says, like most other financial instruments, the history of futures began in the 17th century in Holland when Europe was overwhelmed tulip mania". The bulb was worth so much money that the buyer simply could not buy it, although some part of the savings was present. The seller could wait for the harvest, but no one knew what it would be like, how much it would have to sell, and what to do in case of a crop failure? This is how deferred contracts came about.

Let's take a simple example . Suppose a farm owner is engaged in growing wheat. In the process of work, he invests in the purchase of fertilizers, seeds, and also pays for the work of employees. Naturally, in order to continue, the farmer must be sure that all his costs will pay off. But how to get such confidence if you cannot know in advance what the prices for the crop will be? After all, the year may turn out to be fruitful and the supply of wheat on the market will exceed demand.

You can insure your risks with the help of futures. The farm owner can conclude after 6 or 9 months at a certain price. Thus, he will now know how much his investments will pay off.

This is the best way to insure price risks. Of course, this does not mean that the farmer unconditionally benefits from such contracts. After all, situations are possible when, due to a severe drought, the year will be lean and the price of wheat will rise significantly higher than the price at which the contract was concluded. In this case, the farmer will not be able to raise the cost, since it is already fixed under the contract. But all the same, it is beneficial, since the farmer has already included his expenses and a certain profit.

It is beneficial for the buyer as well. After all, if the year is lean, the buyer of the futures in this case will save significantly, since the spot price of raw materials (in this case, wheat) can be significantly higher than the price of the futures contract.

A futures contract is an extremely significant financial instrument used by most traders in the world.

Translating the situation to today's rails and taking as an example Urals or Brent , a potential buyer turns to the seller with a request to sell him a barrel with delivery in a month. He agrees, but not knowing how much he can earn in the future (quotations may fall, as in 2015-2016), he offers to pay off now.

The modern history of futures dates back to 19th century Chicago. The first commodity for which such a contract was concluded was grain. Initially, farm owners brought grain or livestock to Chicago and sold it to dealers. At the same time, the price was determined by the latter and was not always beneficial to the seller. As for the buyers, they faced the problem of delivery of goods. As a result, the buyer and the seller began to do without dealers and conclude contracts between themselves.

What is the scheme of work in this case? She could be next - the owner of the farm was selling grain to a merchant. The latter had to ensure its storage until its transportation became possible.

The merchant who purchased grain wanted to insure himself against price changes (after all, storage could be quite long up to six months or even more). Accordingly, the buyer went to Chicago and entered into contracts with a grain processor there. Thus, the merchant not only found a buyer in advance, but also ensured an acceptable price for grain.

Gradually, such contracts gained recognition and became popular. After all, they offered undeniable benefits to all parties to the transaction.

For example, a grain buyer (merchant) could refuse to buy and resell his right to another.

As for the owner of the farm, if he was not satisfied with the terms of the transaction, he could always sell his obligations for delivery to another farmer.

Attention to the futures market was also shown by speculators who saw their benefits in such trading. Naturally, they were not interested in any raw materials. Their main goal is to buy cheaper in order to sell more expensive later.

Initially, futures contracts only appeared on grain crops. However, already in the second half of the 20th century, they began to be concluded on live cattle. In the 80s, such contracts began to be concluded on precious metals, and then on stock indices.

During the development of futures contracts, there were several problems that needed to be solved.

• First, we are talking about certain guarantees that the contracts will be executed. The task of guaranteeing is undertaken by the exchange where futures are traded. Moreover, development proceeded in two directions. Special stocks of goods and funds were created on the stock exchanges to fulfill obligations.
• On the other hand, the resale of contracts became possible. Such a need arises if one of the parties to the futures contract does not want to fulfill its obligations. Instead of giving up, she resells her right under the contract to a third party.

Why is futures trading so widespread? The fact is that goods carry certain restrictions for the development of exchange trading. Accordingly, in order to remove them, contracts are needed that will allow working not with the product itself, but only with the right to it. Under the influence of market conditions, the owners of the rights to goods can sell or buy them.

Today, transactions in the futures market are concluded not only for goods, but also for currencies, stocks, and indices. In addition, there are a huge number of speculators here.

The futures market is very liquid.

How futures work

Futures, like any other exchange asset, has its price, volatility, and the essence of traders' earnings is to buy cheaper and sell more expensive.

When a futures contract expires, there may be several options. The parties remain with their money or one of the parties makes a profit. If by the time of execution the price of the goods increases, the buyer receives a profit, since he acquired the contract at a lower price.

Accordingly, if at the time of execution the cost of the goods decreases, the seller receives a profit, since he sold the contract at a higher price, and the owner receives some loss, since the exchange pays him an amount less for which he bought the futures contract.

Futures are very similar to options. However, it is worth remembering that they provide not the right, but the obligation of the seller to sell, and the buyer to buy a certain amount of goods at a certain price in the future. The exchange acts as a guarantor of the transaction.

Technical points

Each individual contract has its own specification, the main terms of the contract. Such a document is fixed by the exchange. It reflects the name, ticker, type of contract, volume of the underlying asset, time of circulation, delivery time, minimum price change, as well as the cost of the minimum price change.

Concerning settled futures, they are purely speculative in nature. After the expiration of the contract, no delivery of goods is expected.

It is settlement futures that are available to all individuals on exchanges.

Futures price is the contract price for this moment time. This price may change before the contract is executed. It should be noted that the price of the futures is not identical to the price of the underlying asset. Although it is formed based on the price of the underlying asset. The difference between the price of the futures and the underlying asset is described in terms such as contango and backwardation.

The price of the futures and the underlying asset may differ(despite the fact that by the time of expiration this difference will not be).

• Contango— the value of the futures contract before expiration ( expiration of futures) will be higher than the value of the asset.
• Backwardation— the futures contract is worth less than the underlying asset
• Basis is the difference between the price of an asset and a futures contract.

The basis varies depending on how far the expiration date of the contract is. As we approach the moment of execution, the basis tends to zero.

Futures trading

Futures are traded on exchanges such as FORTS in Russia or CBOE in Chicago, USA.

Futures trading allows traders to take advantage of numerous benefits. These include, in particular:

• access to a large number of trading instruments, which allows you to significantly diversify your portfolio of assets;
• the futures market is very popular - it is liquid, and this is another significant plus;
• when trading futures, a trader does not buy the underlying asset itself, but only a contract for it at a price that is significantly lower than the value of the underlying asset. It's about the warranty. This is a kind of collateral that is charged by the exchange. Its size varies from two to ten percent of the value of the underlying asset.

However, it is worth remembering that warranty obligations are not a fixed value. Their size may vary even when the contract has already been purchased. It is very important to monitor this indicator, because if there is not enough capital to cover them, the broker may close positions if there are not enough funds in the trader's account.

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