The term futures. What are futures and why are they interesting to investors?

Time dictates its own rules: technological progress leads to the emergence of new phenomena, professions, and terms. Futures are an instrument that was unknown to the general public just a few years ago. But a sharp breakthrough in this direction was provided by the massive spread of the Internet. It has given rise to interests, activities, professions and even sources of income that would have been difficult to imagine just a few years ago. It also made available specialties that were previously impossible to dream of. Take, for example, stock trading: both a pensioner from a residential area near Moscow and the head of a young family from the rural outback, where the cultural and educational program is limited to a village club, can operate with securities or resources, making a profit from transactions worth millions. Naturally, success in both the first and second cases is ensured by self-education: practical trading on the stock exchange will not be taught either at school or at college. We will deal with those who decided to comprehend this difficult but profitable science:

• what is a futures in simple words,
• what is futures trading;
• what concepts you need to know to work with futures;
• on what principles the price for the “future” is formed;
• what role does this instrument play in the global economy;
• how futures for the most popular resources are sold and bought;
• how all this information can be turned into personal income.

History of futures transactions: who came up with the idea of ​​trading the future

To explain what a futures is in simple words, we will have to take the inquisitive reader back to the past when this derivative was born (you can read more about this instrument in the article “ » ). Until the middle of the 19th century, trade was carried out in the most direct way: producers and rural workers gathered periodically for large-scale auctions (analogous to annual mass rural fairs), where they tried to find a buyer for their products. Receiving a profit, for example, for wheat, the farmer immediately purchased tools and household items, household utensils and fabrics, leaving minimum amount for everyday expenses until the next harvest. Producers of grain and vegetables found themselves in the most disadvantageous position. They did not have to count on income before next fall, and the volume of income itself often turned out to be unpredictable. Good weather, abundant harvest and high quality goods should theoretically bring good profits. But in reality they are the same good conditions They also increased the yield in their neighbor’s fields: supply at the “fair” began to exceed demand, in an attempt to sell at least something, competitors began to reduce prices (this process in economics is called dumping), as a result, the expected excess profits turned out to only cover the debts accumulated over the year.

The situation was poorly corrected, even if nature was on the side of the producer: traders could not immediately navigate the possibilities and rarely sold the fruits of their labor at an adequate market price. In a word, if the mechanics of selling a deal “for the future” did not form on its own, it would have to be invented. In 1848, the first documented deal involving a promised harvest was made in Chicago. The subject of the auction was corn.

So what is futures in simple words?! Futures - the future. Futures are the promise of a transaction. This is the sale of the autumn harvest in the spring, documented:

• the trader was calculating his possibilities back in the spring and planned growth;
• then he offered to buy the future harvest, guaranteeing that he will not set the price higher than the agreed price and will not agree to the terms of a more generous buyer, leaving the counterparty without raw materials;
• except signatures the transaction was usually sealed with collateral, which the manufacturer could use for business development and personal needs.

Who will be the biggest winner will be shown in the fall, that is, the deadline for the transaction to be executed. Yes, it may turn out that the market price of the item being traded will drop significantly. When considering futures, we will look for examples of such developments in the foreseeable past: oil and its derivatives, like natural gas, in 2014 were traded significantly below the base value of futures concluded at the beginning of the year. The difference was 30–40%, meaning that by transacting in real time, the buyer could save millions. But to understand the essence of this mechanism, it is worth imagining what would happen in the opposite situation. Let’s take the same turbulent 2014 as an example: the price of coffee increased. Those who entered into futures for the delivery of grains before flowering received a 43% profit in December. Purchasing futures insures both parties: the producer against a sharp drop in price or lack of demand, and the buyer against a lack of supply and rising costs. If we say what a futures is in simple words, then it is a mutual agreement for the sale of a specific resource in certain period

at a pre-agreed price.

Futures characteristics and basic transaction rules The basic rules for securing futures transactions were also worked out back in the 19th century. They have changed little

• The contract description (futures specification, in the language of the global economy) includes: Name underlying asset
• , that is, the subject of the transaction; his the price at which the transaction will be completed despite all the manipulations with futures and market value
• at the time of completion of the transaction; volume of resource
• , which will be equated to a specific package; deadlines for fulfillment of agreements
• and mutual settlements on purchased futures; type of futures

(calculation or delivery form). IN modern economy , when a significant part of the transactions is carried out through the exchange, the characteristics of the most popular futures are established by the same financial institutions , and ordinary participants in transactions operate with ready-made packages. The strengthening of the role of exchanges gave rise to another form of work with futures: standard packages began to be actively resold by both sides. A manufacturer who is not ready to fulfill the terms of his part of the contract may cede a package of obligations to a similar enterprise, as can a buyer who changes his mind or decides that the deal is unprofitable for him. In any case, the exchange will monitor the fulfillment of the futures terms. Within the agreed period, both parties fulfill the terms of the contract: if we're talking about, then within 24 hours after the transaction is closed, the system will calculate profits and losses for participants.

Futures - definition and short educational program: basic market terms

A reader who is seriously thinking about working and making money on the futures market is unlikely to limit himself to this a short review, what futures are in simple words, and will quickly move on to more serious literature. To easily understand what is being discussed in the guru’s master classes stock trading, you need to know a few basic terms: what futures and options are, what futures expiration is, and much more. I won’t overwhelm you with complexities and will explain the concepts literally “at your fingertips”:

1. Futures(definition) – an agreement on a transaction in the future with a set price and execution date.
2. Futures trading- purchase and sale of these instruments.
3. Deadline- the period from the conclusion of the transaction to the execution of the contract, trading time.
4. Futures glass- selection of close supply and demand positions.
5. Futures price- current futures price.
6. Physical, real or market price- cost of goods for this moment.
7. Basis- the difference between the futures and market prices can be either positive or negative
8. Step- minimal price fluctuation.
9. Expiration date- the deadline for closing the transaction, repurchasing the goods by the owner of the futures.
10. Contrango- a situation when the futures price is higher than the prices of the physical market.
11. Backwardation- a situation when the futures price is lower than the prices of the physical market.
12. Variation margin- profit or loss from the transaction.

Settlement and delivery futures are contracts with different execution features

Understanding what futures are in simple terms and how to make money with them is impossible without seeing the difference between the two main types of contracts.

Deliverable futures are essentially purchase and sale contracts with deferred execution and fixed price. The parties to the transaction, of which there cannot be less than two, agree on delivery on one side and purchase on the other. At the appointed time, the assets are transferred at the price specified in the contract. The sale is guaranteed by a deposit or a blocked amount in the accounts of the bidders.

settlement futures, examples of which we will consider below, does not imply the exchange of goods between the parties to the transaction. This is simply financial insurance (hedging) of risks. Trading on the exchange goes on as usual, goods are bought and sold, and participants in settlement futures trading use their money to ensure the execution of contracts. Those who bought futures at a price below the market price at the time of closing the transaction will receive all the profit. Anyone who did not guess the price jumps and purchased a settlement futures, the definition of which I gave above, more expensive than the market price on the expiration date, covers the difference with his deposit. What is the expiration of futures, we found out above. Since this form of transactions is the most common in the Internet age, I will explain once again: what is a futures in simple words, using the example of a “deal for the future” on coffee beans, since a cup of this drink is standing in front of me:

• The price of American grain under the futures contract on the market is currently a little more than $2.7 per kilogram.
• Only the weather forecast for the Brazilian summer can significantly affect price movements, since the volume of the harvest directly depends on the ratio of sunny and rainy days;
• You can safely exclude demand from the price calculation for coffee futures, since this “drug” is out of season and is constantly in demand (I already know);
• Having looked at the price growth chart (and it has risen from $1.4 just in the last month) and realizing that the current 2.7 is clearly too big a jump, I would refrain from buying coffee futures at this price. Most likely, the transaction in September will close at 2.4–2.6, that is, I would have lost on the purchase and the amount reserved by the exchange would have been debited from the account.
• But for the sake of the purity of the experiment, let’s imagine the opposite situation: I buy futures now, and tomorrow they report that a cataclysm has wiped out half of the Brazilian plantations and the price of coffee is soaring.

In just a few days I will be able to resell my contract, making a profit from speculation, because the futures price will be much higher. True, as a prudent and patient person, I would not do this: by autumn, due to increased demand for the cold season, the price of coffee always rises slightly, and I will make the maximum profit in the last months of trading.

Modern exchanges or how to sell weather futures - examples Since the purpose of our conversation is to understand what a futures is in simple words, I gave an example of the corresponding one, right in front of my nose. If we consider the issue more broadly, then Initially, trading was carried out only on the most popular products, imported and exported around the world, and the process of purchasing futures itself was more like a game of “who will out-shout who.” Trading in the 21st century is seriously different, but to achieve this, a number of transformations had to be introduced into the system:

• expand the list of underlying assets;
• systematize their labeling;
• create electronic system bidding

The Globex electronic trading platform was tested on the Chicago Mercantile Exchange. It is the electronic platforms created in its likeness that now allow traders to see the futures market and trading for raw materials on the monitor, to participate in the process online, and not to tear their throats in the trading room.

Without bothering the reader with voluminous and useless encyclopedic statistics, I will give short summary:

• large exchanges, conducting transactions with a significant list of futures assets, a little more than a dozen;
• each of them works thousands of analysts and auditors;
• 5 days a week on them More than 160 product groups are sold every second;
• agricultural products, metals, currencies, stocks, raw materials and energy are actively traded, interest rates and stock indices.

We can’t help but talk about the “exotic”: in 1997, on the same Chicago stock exchange, and then on several others, the opportunity arose to “trade the weather.”

Weather futures appeared because this factor involuntarily entails changes in almost all quotes: stock traders, who are to some extent players, could not ignore the opportunity to predict this aspect. The zero point was taken as average weather conditions, which are included in the calculators for calculating the consumption of electricity. Positive and negative forecasts of the relationship to the real situation are the same subject of bargaining as live cattle or fuel oil, and weather futures are in constant demand.

We analyze the futures ticker: the formation of markings from A to Z Electronic transactions are completed in fractions of a second, and traders from all over the world participate in the trades. This speed of work is facilitated by the introduced general system futures markings.

It is quite simple, although it looks like “Chinese writing” to an untrained person. Understanding what a futures is in simple words, and knowing what characteristics should be included in its description, it is not difficult to understand it.

1. The code contains 3 main indicators:
2. Instrument - the basis of the contract (2 symbols);
3. Expiration month (1 character);

You only have to remember the designations of the months: the calendar year from January to December corresponds to the order F, G, H, J, K, M, N, Q, U, V, X, Z.

In practice, it will probably be easier to understand the markings: we take the mysterious bargaining object GzZ7:

1. Gz - Gazprom shares;
2. Z - December;
3. 7 - 2017.

Here is a futures contract for Gazprom shares with expiration in December 2017.

Similarly:

• SlV6 - silver futures with an expiration date in October 2016;
• EuK6 is a futures contract on the euro/ruble exchange rate, the expiration of which is scheduled for May of this year.

Having memorized the designations of popular or personally most attractive assets, you can quickly navigate supply and demand by choosing the necessary abbreviations automatically.

How to make money on futures

It is unlikely that the reader was brought to this page by curiosity and thirst for knowledge. I am sure that the main reason for curiosity about what futures are in simple words hides the usual and understandable mercantile interest “how can I personally make money on this.” Next, we will look at how to make money on futures and determine which of these methods is suitable for you personally.

Let's take a closer look stock exchange operations involving futures:

• speculative;
• arbitration;
• risk hedging.

Futures are a universal instrument. It provides the trader with a lot of opportunities, from direct earnings on deliveries and changes in the basis (that is, the difference between the futures price and the real one), to complex speculative schemes, which are the highest aerobatics of exchange trading.

Futures as insurance against a fall or rise in price: a tool for macroeconomic sharks

The desire to hedge (insure) risks was the reason for the emergence of futures. But if we talk about real time, then such transactions related to the obligation to supply in fixed time, currently account for less than 3% of the volume of all transactions. The remaining 97% consists of calculated speculative transactions. And yet, this type of transaction lives on: suppliers are looking for guaranteed points of sale, buyers are looking for profitable offer . The participants in these operations, by and large, are the first and last links in the futures chain: sooner or later the contract will still reach the end consumer. Alas, it is quite difficult to enter this segment of the business, unless, of course, you need a dozen or two tons of wheat or you have the need to sell several thousand cubic meters of timber. Active participants futures market are and. Thus, the sale of Gazprom futures allowed the company to stay afloat during a sharp drop in energy prices last year: futures contracts provided for a significantly higher oil price. Also, the futures market evens out prices and makes differences from speculation less obvious.

Speculative operations with futures: money out of thin air and the ability to navigate the situation

A number of advantages of popular futures have made this market attractive to those who profit solely from repurchasing, and have never held in their hands either the money with which they operate or the goods that they constantly “buy” or “sell.” Futures are a convenient tool for beginners. Working with them minimizes risks and creates relatively safe working conditions. The trading period for a specific futures can be a day or several months, and the price during this period can fluctuate greatly, and for quite understandable and predictable reasons. This makes it possible to calculate the ups and downs and make money on the difference. Understanding what futures trading is and being able to analyze the impact of an event on prices, you can make forecasts almost without error.

• The advantages are obvious; they allow you to make a choice in favor of the futures market, even when Forex or stock trading are on the other side of the scale:
• more predictable price hikes;
• high profitability due to large “leverage” (amount provided by the broker against the security of one’s own funds);
• good liquidity;
• minimum terms for holding positions open;

small commission. Experienced traders successfully work in this area, increasing capital with a relatively small amounts

thanks to knowledge and analytical mind.

Arbitrage operations have complex mechanics: during trading, a trader simultaneously has several open transactions concluded at different times on the same exchange, or simultaneously, but on different ones. The goal of all tricks is to make a profit from the same instrument due to the difference in the price of futures and shares (intercommodity arbitrage), futures with different expiration times (calendar arbitrage), etc. “Forks” can form if traders on two different exchanges disagreed on the exchange rate, and the price of the same product began to differ significantly. This position cannot be maintained for long, and the rate will level out quickly enough - this is a guideline for the trader. To explain it more simply, let’s take at least one situation (I remind you that there can be many of them and arbitrage operations require serious theoretical training and practical trading experience, not to mention start-up capital). But anyway

• Let's return to the example of spatial arbitrage:
• two exchanges FORTS and MIFUT trade futures for Norilsk Nickel shares;
• after waiting for a “fork” to appear between two sites, we sell the expensive one and immediately purchase a cheap futures contract with the same expiration date;

inevitable leveling will make it possible to make a profit - not high, but guaranteed. The profitability of arbitrage operations is ensured by constant market monitoring, technical analysis , a large number of transactions in a short period of time and complete immersion in the situation. To get acquainted with financial markets and starting arbitrage operations is not the best choice. When comparing multi-way schemes, for example, with binary options, from which profits can only be received for a correctly predicted rate, the comparison is clearly not in favor of the former. Futures minimize risk, but

binary options

show greater profitability. Having understood in detail what futures and options are, the essence of the choice becomes clear: slow and safe income or a share of risk and profit in geometric progression. The risk, moreover, is compensated by knowledge and prudence. Futures and options – what to choose? There is a lot of information on the Internet both on the technique of working with them, and pure statistics on the prices of this or that resource: coffee, gas, oil, shares of Gazprom or Sberbank. A sincere desire to become a real expert will allow you to comprehend all this and become successful. If your personality or modest starting capital requires more active action, I advise you to consider the possibility of working on binary options: a technique that allows you to make up to 80% profit on each transaction lasting a few minutes. The key to success in this case is strict adherence to trade and regulations. Be sure to also choose one that will allow you not only to earn money, but also to withdraw what you have acquired through back-breaking labor. Perhaps binary options will become a chance to earn an initial amount for operations with futures, and, perhaps, a matter of life!

On modern market There are a huge variety of ways to make money - even by purchasing assets that you don't need at all. To make a profit, it is enough to sell them at a higher price in a good period. We will discuss how popular and safe this activity is in the article below.

Futures contracts: concept and application

Futures - what is it? This is the most popular way to insure your own risks that have high level liquidity on the exchange market. Therefore, not one big company With an international reputation, it has long been impossible to do without this financial instrument.

A futures contract is a document that agrees on the process of buying or selling an asset. As a rule, when concluding such agreements, both parties to the transaction agree on only two key points: the timing of potential deliveries and the price of the goods. Other characteristics are specified in the specification earlier (this includes labeling, packaging, transportation, and others).

Such transactions speed up the process of purchasing and selling products, which is why they have captured a significant market segment in economic relations between entrepreneurs.

Key Features of Futures

Futures - what is it? This is not only a type of transaction, but also a set of characteristics that distinguishes them from other types of agreements between partners. So, we can highlight a number of properties that they possess:

1. Futures are characterized by high liquidity because, when concluded, they comply with a set of conditions presented by the exchange.
2. Standard and flexible in use - easily sold and liquidated by concluding a reverse agreement.
3. The risks of a futures contract tend to zero (but are not equal to it), since such a transaction is not aimed at real fact purchases and sales of this or that product, but on the pricing game. For statistics: only a twentieth of the concluded contracts result in actual deliveries, which is due to the unpredictable behavior of the price curve.
4. When concluding a futures contract, both parties are confident in their partner, since their obligations are insured by the clearing house operating within the exchange.
5. Such transactions involve only those goods whose price cannot be predicted several periods in advance.

Why do you need futures trading?

A futures contract cannot be considered solely as an instrument of the exchange market, since it performs certain functions in economic activity enterprises.

Thus, with the process of economic evolution, relations between business entities become more bitter and risky. Therefore, futures trading on the stock exchange is a natural process of survival for an entrepreneur, in which he can not only carry out his operational activities, but also strive to receive maximum profit for this.

From the point of view of economic activity, this type of relationship is a direct way to reduce risks by reinsuring changes in prices for a particular product. Even in such conditions it is possible, albeit illusory, to predict the level of income in future periods.

Futures should not be confused with forwards

It so happened historically that a futures contract is often confused with a forward contract - either due to the abundance of borrowed words in exchange terminology, or due to illiteracy.

A forward is a transaction with increased risk, since failure to fulfill obligations under an agreement can result in huge penalties, while the agreements discussed in this article can be easily terminated, as discussed above.

Moreover, it is possible to draw up a futures contract - due to its nature - only within the exchange, but another - on the contrary, outside the scope of its operation. Also, forward contracts are concluded in a purchase and sale transaction of absolutely any asset, while futures support relations only in the context of a limited range of goods. And, most importantly, no one insures forwards, so the risks associated with them should be viewed in a slightly different prism.

Types of futures contracts

Despite their narrow focus, futures have a wide range of varieties, which are classified according to certain criteria.

To begin with, it is worth understanding that a futures contract can be either commodity or financial. The first is classified depending on the group of assets being sold. It can be:

• wood processing industry products;
• raw materials of the oil refining industry;
• metals;
• other semi-finished products.

Financial contracts in the context of futures are as follows:

• interest (occurs in bond transactions);
• index (the product changes value depending on stock market indicators);
• foreign exchange (contracted to earn money on the dynamics of currency quotes);
• and the last option is a stock one (they are quite rare; the second name is a futures contract for shares).

The main feature of a futures contract

The vast majority of business entities are attracted to futures contracts by the fact that they are standardized (for all types of transactions and under different conditions of implementation). This means that the transaction does not have a clearly defined relationship between the seller and the buyer - between them there is always an intermediary in the person of the exchange clearing house.

The futures contract price and delivery volumes are the only criteria that differ in such arrangements. This feature cannot be considered a disadvantage, since it has a number of positive consequences:

• the deal is concluded quickly and painlessly for both parties;
• the number of contracts is growing;
• mutual settlements are simple, which is a significant attractive feature;
• no resources and financial costs to draw up a template, since a standard contract is being concluded.

Futures market today

Purchasing a futures contract is a complex and rather complex process, despite the simplicity of its preparation. There are three major institutions involved here.

The first element is the direct place of the transaction - the exchange itself. She does not carry out any commercial activities and only coordinates the relationships between participants - potential sellers and buyers.

The second element is the clearing house. Without it, it is impossible to carry out any of the transactions, since it is a kind of guarantor and insurer in the fulfillment of the bilateral obligations of the parties to the agreement.

And the last element is the custodian of the treasured commodity, around which vigorous activity on the stock exchange unfolds. Warehouses play this role.

In order for the above institutions to function, the parties to the contract make a certain monetary contribution when concluding a transaction to cover operating costs.

Futures market: transaction procedure

When concluding a contract, the procedure for its execution is divided into three stages. In this case, the final day is the day of fulfillment of obligations (closing of the transaction).

To begin with, the transaction is registered. On the same day, the necessary contributions from the participants are paid to the treasury, and the fact of the relationship is also registered in the clearing house.

At the second stage, the transaction remains open, the declared amounts of variable costs are paid to the treasury, as well as the missing funds for down payments, if the rates have been changed by the clearing house.

At the last stage, the transaction is closed, the profit is calculated and divided, the subject of the agreement (asset) is transferred into the possession of the buyer. If the contract is canceled by registering a reverse contract, then fees for this service are paid.

Hedging as an element of the futures market

None of the market participants wants to remain at a loss due to undesirable price dynamics of the asset stated in the transaction, so everyone strives to minimize their risks. For this purpose, hedging with futures contracts is actively used in practice.

However, it is worth noting that this procedure, in the event of an unfavorable price jump, will not bring the participant the desired profit, but it can still protect against losses. You can hedge the transaction process either completely or partially (in this case, only certain price ranges are insured).

Both sellers and buyers can minimize risks, but it is worth remembering that the level of hedge often depends on the overall financial health of the exchange, since speculation in the purchase and sale processes has not yet been canceled. Therefore, do not forget: the higher the turnover in the market, the safer your potential profit.

A futures is a contract under which the parties undertake to complete a transaction under pre-agreed conditions. Let's talk about what a futures contract is in simple words and explain how it works.

What is this article about?:

What is a futures in simple words

Futures are a derivative, that is, a derivative financial instrument. In simple words futures is a security, but this is not entirely true, since it is not real asset, not a stock or bond.

A futures or futures contract is a contract under which the parties undertake to complete a transaction under pre-agreed conditions. On the day of fulfillment of obligations, the seller delivers the goods and the buyer pays the agreed amount. Moreover, the participants in the transaction can only choose the price of the contract and the time of its execution, and the rest - the volume of goods, its quality, delivery method and other parameters are set by the exchange. Also, the participants in the transaction are responsible to the exchange for the fulfillment of obligations under these obligations ( ).

The meaning of the word futures comes from the English word future - the future.

Download and use it:

How it will help: the document will be useful to companies investing temporarily free cash V securities. It describes in detail the tasks and functions structural unit responsible for the acquisition of shares, bills, bonds and other securities.

Futures example

Each exchange provides trading participants with detailed and detailed description futures contracts that can be traded on its platform. For example, in Russia they can be seen on the FORTS (Futures & Options on RTS) exchange platform - “RTS Futures and Options” on the Internet.

Let us explain the description using the example of gold futures in the table, the first two columns are FORTS data, the comments are ours.

Table. An example of a gold futures contract and its description

The last paragraph indicates the specifics of derivative execution. Regarding GOLD-6.18, it is indicated that positions will be closed with the transfer of variation margin on the day of contract execution. The margin will be determined based on the gold price provided by The London Bullion Market Association.

Clearing is the moment when the exchange makes an intermediate financial results for operations with futures. At this moment, the amount of income or loss is determined and the so-called variation margin is calculated. If the trader’s balance falls below the norm, a margin call occurs, the trader is obliged to provide additional collateral, or the broker will forcefully close the position.

Similar information is provided by all world exchanges that provide the opportunity to trade futures contracts. They may differ in volume, timing, step sizes and other data ( ).

Types of futures

Currently, a distinction is made between deliverable and non-deliverable futures.

Deliverable futures

A deliverable futures is a contract that provides for the actual delivery of an asset. For example, oil, wheat, precious metals, raw materials, in general - any material asset.

Non-deliverable futures

A non-deliverable futures contract does not provide for delivery of an asset. Under this contract, the exchange only carries out settlements between the parties to the transaction according to the price of the underlying asset at the time of execution of the contract.

In the futures market, up to 95% of transactions are non-deliverable. This is due to the high activity of speculators in the market. On the other hand, deliverable futures also participate in trading. These derivatives insure producers against sharp fluctuations in the price of a product. A predetermined price for an asset will not allow you to receive excess profits, especially if the market experiences increased demand, but it will also prevent you from going broke if the price of the asset suddenly falls.

Non-deliverable futures contracts are also divided into commodity and financial. In the first case, the underlying asset is raw materials, materials, any goods. In the second case - financial indices, currency or interest rates, stock indices, and so on. Unusual futures, for example for weather, are also in circulation on the American market. Which, by the way, despite all its unusualness, has a significant impact on the work of energy companies and agricultural producers.

More recently some American stock exchanges started trading Bitcoin futures. It is worth noting that such a move is a rather risky undertaking, because the peculiarities of trading Bitcoin are that its volatility is unlimited.

Essentially, a futures contract is a dispute between two parties regarding an event that may or may not happen. All other parameters, including the price of a given derivative, are a matter of concern for the exchange itself, which is responsible for ensuring the execution of this transaction.

More on the topic:

How it will help: understand whether a particular company is worth investing in securities. It contains an algorithm of actions that need to be taken if the financial director seeks to earn additional profit in this way.

How it will help: the recommendations will be useful to enterprises that are just planning to hedge currency risks and develop their strategy, as well as to those organizations that regularly engage in hedging and want to optimize labor costs.

Features of futures trading on the market

Futures are a speculative instrument and, as already mentioned, up to 95% of transactions are non-deliverable, that is, they can be considered speculative. The main interest when buying this instrument are two features - volatility and leverage. With volatility it is clear - exchange rate fluctuations allow you to make money even in intraday trading, and not only with “scalpel” trading, but also manually, with a small number of transactions. Scalpel trading involves confinement large quantity transactions when a trader fixes a profit or loss with a minimal change in the value of an asset.

Futures leverage. It is different from leverage and depends on the size of the guarantee obligation. By paying 10% of the lot price, the trader gets the opportunity to operate with a leverage of 10. If guarantee obligation is five percent, the leverage is 20. Actually, this is not borrowed funds, this is the specifics of working with this derivative instrument.

The idea behind futures trading is simple - buy low, sell high. However, there are some peculiarities here:

• comfortable. There is no need to purchase real shares, you just need to make a guarantee, which is usually a few percent of the cost of the entire lot;
• Variation margin is accrued or written off daily on trading days. Due to this, a more subtle influence on the profitability of the account is achieved;
• the volatility of futures is usually higher than the volatility of assets, and this provides higher opportunities for earnings;
• Leverage makes it possible to earn more and faster. However, this also works in the opposite direction. That is, a margin call may occur and if the collateral is not deposited, the broker will forcefully close the position at a loss for the trader.

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

A simple example. The farmer planted wheat. The price of this product on the market today, conditionally, is 100 rubles per ton. At the same time, forecasts are coming 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 on the market and a fall in prices. The farmer does not want to sell grain in the fall at 50 rubles per ton, so he negotiates with a certain buyer that he is guaranteed to supply him with 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 the futures contract.

Fixing the price of a product that will be delivered after a certain period at the time of concluding a transaction is the meaning of a futures contract.

Derivatives emerged 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 a certain point in the future appeared with the letter. Thus, already on cuneiform tablets from 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 derivatives market Moscow Exchange - FORTS, where one of the most popular instruments is futures on the RTS index. The volume of the futures market around the world today significantly exceeds the volume of actual trading in the underlying assets.

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

Technical details

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

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

Futures contracts are either “settled” or “delivered”. A delivery contract implies the delivery of an underlying asset: you agreed to buy gold in 6 months at a certain price - you get it, everything is simple here. The settlement futures contract does not imply any delivery. Upon expiration of the contract, profits/losses are recalculated between the parties to the contract in the form of accrual and write-off of funds.

Example: We bought 1 futures contract on the Russian RTS index, assuming that by the end of the contract's maturity the domestic index will rise. The circulation period has ended, or, as is often said, the expiration date has arrived ( expiration date), the index grew, we received a profit, no one supplied anything to anyone.

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

The futures price is the price of the contract at the current moment. It changes during the life of the contract, right 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 close direct dependence on it. Depending on whether the futures is cheaper or more expensive than the price of the underlying asset, situations called “contango” and “backwardation” arise. That is, today’s price reflects some circumstances that may occur, or the general mood of investors regarding 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 bought (sold) the underlying asset directly. The fact is that when performing a transaction, you use warranty coverage (GS). This is a refundable fee that the exchange charges when opening a futures contract, in other words, a kind of collateral that you leave when making a transaction, the amount of which depends on a number of factors. It is not difficult to calculate that the leverage available in futures transactions allows you to increase potential profits many times over, since the leverage is most often noticeably lower than the cost of the underlying asset. However, we should not forget about the risks.

It is important to remember that the GO is not a fixed value and can change even after you have already purchased the futures contract. Therefore, it is important to monitor the status of your position and the level of the GO, so that the broker does not close your position at a time when the exchange has slightly increased the GO, and there are no additional funds in the account at all. The BCS company provides its clients with the opportunity to use the service. Access to trading on the derivatives market is provided on 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 birth 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 currently agreed prices. Thus, futures contracts are used as a way to reduce risks by hedging both real activities (production) and investment operations, which is facilitated by fixing the price 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 the dollar/ruble pair. Let's say you expect to receive $10 thousand and the current exchange rate satisfies you. In order to hedge yourself against unwanted changes in the exchange rate, you sell 10 contracts with the corresponding expiration date. Thus, the current market rate is fixed, and if it changes in the future, it will no longer be reflected in 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 personal income tax payment. But at the same time, the market has already grown 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 yourself against a market decline. If the market declines, you can close your short positions in futures, thereby leveling out current losses on the securities in your portfolio.

Speculative operations. Two main factors contributing to the growing popularity of futures among speculators are liquidity and high leverage.

The speculator’s task, as is known, is to make a profit from the difference in purchase and sale prices. Moreover, the profit potential here is maximum, and the retention period open positions- minimal. At the same time, in favor of the speculator there is also such a thing as a reduced commission compared to the stock market.

Arbitration operations are another option for using futures, the meaning of which comes down to making a profit from “playing” on calendar/intercommodity/intermarket spreads. .

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

BKS Express

Russian traders are accustomed to using such an instrument as futures in their activities. RTS, MICEX and other exchanges make it possible to do this in relation to a wide range financial transactions. What are the features of implementing appropriate trading strategies? What are futures and how do they help traders make money?

What are futures

According to the generally accepted definition among traders, futures are financial instruments that allow the execution of futures contracts on an underlying asset, which imply an agreement between the buyer and seller on the price and timing of the transaction. In turn, other aspects of this asset, such as, for example, quantity, color, volume, etc., are specified in separate specifications of the agreement. Futures are a fairly universal financial instrument. They can be adapted to suit the most different areas trading.

Are futures derivatives?

Yes, this is their variety. The term "derivative" is understood by many traders as a synonym for the phrase "derivative financial instrument", that is, one that is complementary to classic purchase and sale transactions. A derivative and futures are a written agreement that defines the terms of a contract for the seller and the buyer. The specificity of any derivative is that, in essence, it itself can be the subject of a purchase and sale agreement. That is, there may not be a real transfer of goods from the supplier to the buyer.

Futures history

In order to study in sufficient detail the essence of futures, it will be useful to find out how these financial instruments appeared, what are the main historical stages of their introduction into financial circulation. Some traders believe that the mechanism of the relationship between the seller and the buyer, which today fits the definition of futures, appeared long before the instrument in question appeared on the market. As often happens in economics, first a phenomenon appeared, and then a term characterizing it.

The market demanded innovation

One of the main types of goods has always been grain. If we talk about the period until the end of the 19th - beginning of the 20th century, then it was among the key items of world trade. Farmers who grew the grains shipped them to buyers by land or sea. In the autumn there was often an oversupply of goods on the grain market - farmers sought to sell their crops as quickly as possible. In turn, in the spring there could be a shortage of grain, which simply did not have time to grow, while what was not sold had time to spoil in the fall, since there was often nowhere to store it. The market somehow needed to resolve this imbalance. This is how urgent financial instruments appeared that allowed grain farmers, as well as suppliers of any other agricultural goods, to enter into contracts with buyers even before the grains had time to ripen or arrive at the point of sale.

Universal tool

Those agreements began to be called forward agreements (from the English forward - “forward”). Futures are, one might say, an adaptation of a forward contract to the peculiarities of trading on the stock exchange. Experts associate their appearance with established transaction standards in business, thanks to which appropriate agreements can be concluded regardless of the type of product being sold. As a result, futures trading has spread to transactions in which not only grain and other agricultural products are sold and purchased, but also raw materials, metals, some finished food products: sugar, coffee, etc. To a relatively new, if we talk about the history of commodity relations, financial exchanges have also adapted to the instrument.

From raw materials to stock indices

There is information that the first trading of futures in trading was carried out on the Dow Jones exchange for transactions on the index of the same name. As a result, financiers received an excellent tool - just as grain suppliers could do in the autumn. Over time, index futures became so widespread that trading volumes on them sometimes began to exceed those of classic transactions.

Futures on the foreign exchange market

The new financial instrument also began to penetrate the foreign exchange markets. One of the factors that made traders interested in using futures was, according to some experts, the abolition of the “gold standard” in the United States in 1971. Immediately after the entry into force of the new norms, quotes on the world currency market began to undergo strong fluctuations. Traders have suggested that futures are the instrument that will help the market get through the high volatility phase.

Appropriate trading mechanisms were introduced, and due to their rapid growth in popularity, experts assumed that this was exactly what the market demanded. Futures for the dollar and ruble, as noted in a number of sources, were first concluded in April 1998. On the first day of trading total amount contracts exceeded 200 million rubles.

Futures in Russia

By the way, the history of Russian stock trading dates back to the times of Peter the Great. And at the beginning of the 20th century, according to some sources, 87 commodity exchanges functioned in Russia. From the late 20s until 1991, this trade institution did not function in our country. But after Russia’s transition to a free market, it became one of the key ones for the country’s economy.

When did the first futures transactions begin in Russia? There is information that the first precedents for the use of this financial instrument were recorded in 1996 on the St. Petersburg Stock Exchange. The first analytical articles began to appear, putting forward theses about the prospects of using futures in Russian trading. In the 1990s, contracts on government and municipal bonds began to be executed through this financial instrument.

Now futures are used on both major ones (RTS and MICEX). The first one even has a specialized segment for trading using this financial instrument - FORTS. Available at FORTS futures and options (another popular way to enter into contracts). It will be useful, by the way, to consider their differences.

How do futures differ from options?

The key criterion for distinguishing futures from options is that the owner of the former must fulfill the conditions of the 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 purchase.

Types of futures. Staged

However, let's continue our study of futures. Modern traders classify them into two types. Firstly, there are so-called staged futures. They represent a contract, at the time of execution of which the buyer undertakes to purchase, and the seller - to cede, the quantity of some asset specified in the specifications of the transaction. In this case, the futures price will be the one fixed at the most recent trading. If the contract expires and the seller does not relinquish the asset, he may face penalties.

Calculated

There are also settlement futures. Their peculiarity is that the seller and buyer pay each other in those amounts that make up the difference between the price of the asset at the time of signing and execution of the agreement, regardless of its actual delivery.

Futures specification structure

One of the key elements of futures transactions is the specification. It is a source that sets out the basic terms of the contract. The structure of the specifications for transactions of the type under consideration is usually as follows: the name of the agreement, its specific type - settlement or staged, the value of the underlying asset, timing, as well as some speculative parameters are indicated. Among the key ones is a tick, or the minimum step of a price change.

Its values ​​depend on the specific asset. For wheat, if we talk about the main world exchanges, it is about 5 cents per ton. Knowing the volume of a futures contract, a trader can easily calculate overall change prices for the entire amount of the asset. For example, if an agreement is concluded for 200 tons of wheat, then it can be calculated that the minimum price adjustment will be $10.

Oil futures

How is trading, say, futures for Brent and other types of oil carried out? Very simple. On modern commodity exchanges The specified grade of oil is traded, as well as two more - Light Sweet and WTI. All of them are called marker oils, since other types of oil are valued based on their correlation with the cost of the ones being traded. Contracts are executed on two main exchanges - NYMEX, in New York, and ICE, in London. The American market sells Light Sweet oil, and the English market sells two other grades. The peculiarities of black gold trading are that they operate around the clock.

The generally accepted benchmark for traders on the planet is the Brent grade. This oil is a marker oil for a significant part of the world's black gold grades, including Russian Urals oil. True, as some analysts note, there are activists among traders who do not consider it advisable to hold Brent as a standard. main reason- it is mainly mined only in the North Sea, in Norwegian fields. Their reserves are decreasing, as a result of which, as some analysts believe, the liquidity of the product is decreasing, and the price of oil may not reflect real market trends.

Brent futures can be easily recognized by the abbreviation BRN of the London ICE exchange. The full name of the contract is Brent Crude Oil. Oil is supplied under monthly contracts. Accordingly, transactions can be concluded at intervals of a month. The maximum contract duration is 8 years. There are short-term oil futures, and there are long-term ones. The value of the corresponding contract is 1 thousand barrels. The value of 1 tick is a cent, that is, the minimum change in the contract price is $10.

How to win in oil trading using futures? Oil prices, according to some economists, depend on the situation in global economy. If a person is well versed in this topic, then he can try to enter into a contract to buy or sell oil at a set price, thus opening a long or short position, respectively. Let’s say that at an oil price of $80 per barrel, a person assumes that in 3 months the price of raw materials will rise to $120. He concludes 1 minimum contract to buy black gold at a price of $90 per barrel. Comes 3 months. Oil, as expected, rises in price to $120 per barrel, but the trader ends up with it at a price of $90. According to the terms of the exchange, he is immediately credited with the required difference of $40.

Futures and currencies

Obviously, in order to trade oil futures, a trader will need a significant investment of money. The minimum contract size, as we have already noted, is 1 thousand barrels, that is, if we take the current, not the highest prices for black gold, an investment of approximately 50 thousand dollars will be required. However, a trader has the opportunity to earn money by concluding dollar futures on the MICEX, for example. According to the terms of the exchange, the minimum contract volume is 1 thousand dollars. Tick ​​- 10 kopecks.

For example, a person assumes that the US dollar will decrease from the current 65 rubles to 40. He opens a long position to sell one contract at a price of, say, 50 dollars, for a period of 1 month. A month later, the ruble is really strengthening its position - up to 40 units per U.S. $. A person has the right to sell the amount specified in the contract specification at an exchange rate of $50 and earn 10 rubles from each unit American currency. But if he doesn’t get the exchange rate right, he will have to fulfill his obligations to the exchange one way or another. This usually happens by posting to your account trading platform deposit of the required amount.

Similar earning mechanisms are possible when trading shares of enterprises. With a balanced, qualified analysis of the state of affairs on the market, a trader can count on great income through futures. Trading on modern exchanges is quite comfortable, transparent and secure Russian legislation. As a rule, a trader has convenient analytical tools at his disposal, for example, a futures chart for the selected asset. The use of the corresponding one among Russian financiers has gained quite stable popularity.