Examples of futures transactions. What is a futures. Details and signatures

It implies the simultaneous execution of opposite operations on the spot and on derivatives market, the purpose of which is insurance against changes in the value of the asset in a direction unfavorable for the investor.

In this case, the subject of the transaction must be the same asset (i.e. shares and futures for VTB shares), or instruments similar in meaning (shares and futures for ).

Hedging with futures contracts can be either long (i.e., futures are purchased) or short (in this case futures are supposed to be sold). Examples of long and short hedges are detailed below.

Hedging with futures contracts is an example of a short hedge.

Let's say an investor has 800 shares, the current market price of which is 130 rubles. The investor is wary of a fall in the share price and, for insurance purposes, takes a position on eight futures contracts for GAZPROM shares (one futures includes 100 GAZPROM shares) from 1 month later at a price of 130 rubles. Since the futures contract is a settlement contract, the investor conditionally undertakes to deliver a block of Gazprom shares in the amount of 104,000 rubles. (130 rubles * 800 shares) in one month.

Further, 2 scenarios are possible: in the first case, the market price drops to 120 rubles, in the second, it rises to 145 rubles. Before the execution of futures contracts, the investor closes his own position in the futures market by buying eight futures sold earlier and receives the following financial result.

The price dropped to 120r. In this case, the investor's prediction about the decline in the share price turned out to be correct, he will receive a loss in the spot market in the amount of 8000 rubles. ((120r.-130r.)*800), because his stock portfolio has become cheaper by that amount. In the futures market, the player will receive a profit of 8000 rubles. ((130r.-120r.)*8*100), because he bought the future at a lower price than he sold it. Thus, the income from operations in the futures market will fully compensate for the losses received by the investor in the spot market.
The price has risen to Rs. Here the investor will receive a profit on the spot market in the amount of 12,000 rubles. ((145r.-130r.)*800) due to the appreciation of his portfolio of securities. However, he will incur a loss on operations with futures in the amount of the same 12,000 rubles. ((130r.-145r.) * 8 * 100). Income and loss in different markets lead the investor to a zero financial result.

Thus, futures contracts make it possible to fully insure a position against the risk of a change in the value of a share in an unfavorable direction, but at the same time it makes it impossible to receive additional income in the event of a favorable market situation.

Hedging with futures contracts is an example of a long hedge.

The market participant expects 99,000 rubles to be credited to his account in a month. With this money, he plans to purchase shares of Sberbank. The market price of the shares at the current moment is 90 rubles, i.e. now an investor could buy 1,100 shares. In this situation, the investor is afraid of an increase in the market value of Sberbank shares, as a result of which he will be able to buy back a smaller number of shares for the same amount of 99,000 rubles. To insure against an increase in the share price, the player buys 11 futures at a price of 90 rubles. (1 futures corresponds to 100 shares of Sberbank).

A month later, by the time the money was credited to the account, the market and futures prices had changed. The investor receives the previously expected 99,000 rubles, sells futures contracts and, based on the total amount, buys shares in the stop market at the prevailing market price. Let's consider three scenarios of price ratios in the futures market and the spot market.

Securities rose to 100 rubles, futures also began to cost 100 rubles. Here, the investor has income on the futures market and at the expense of an additional 11,000 rubles. ((100 rubles - 90 rubles) * 11 * 100) buys the required number of shares. Those. this amount is 11000r. is the investor's hypothetical loss in the spot market, so if the investor had not bought the futures, he would have been able to purchase fewer securities than he needed.
Sberbank fell to 83 rubles, futures on Sberbank also fell to 83 rubles. Here the investor has a loss in the futures market in the amount of 7700 rubles. ((83r.-90r.) * 11 * 100). But for the remaining money 91300r. (99000r.-7700r.) he easily acquires the planned 1100 shares at the current price of 83r. However, in this case, he could have bought more securities if he had not hedged with futures contracts. Those. a kind of payment for the risk of price changes in an unnecessary direction is the loss of the opportunity to receive additional benefit in case of a favorable outcome.
The shares began to cost 105 rubles, and the futures price was 103 rubles. Profit from the sale of futures amounted to 14300 rubles. ((103r.-90r.) * 11 * 100), but at a price of 105 rubles. to buy 1,100 shares of Sberbank, an amount of 115,500 rubles is needed, and the investor has only 113,300 rubles available. (99000 rub. + 14300 rub.). So the player should deposit an additional amount of 2200r. In this case, hedging with futures contracts turned out to be incomplete.

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 in advance deadlines and at the 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.

Not now economic situation dictates the price of futures contracts, and they, by forming the future bid and offer prices, 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 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 contract is very convenient for both parties, as it allows you to avoid situations where sharp fluctuations 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 instruments. financial markets which 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. That decides trading floor on which trading takes place. 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 relate to purely professional instruments, such as options and low-liquid 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 perform one of its main tasks: the accumulation and redistribution Money. 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 the owner farming engaged in cultivation 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 development. stock 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.

Upon expiration futures contract 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 everyone. individuals on the stock 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 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 fixed. Their size may vary even when the contract has already been purchased. It is very important to keep track of 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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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 shares, bonds, goods, currency, interest rates, inflation rate, 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. Volume futures market all over 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; - minimal change prices (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 execution month (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/losses are recalculated between the parties to the contract in the form of accrual and write-off of funds.

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 at the current 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 species 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 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 satisfies 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. Do you plan to hold the shares long enough, more than three years, to be exempt from payment of 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 is maximum here, and the retention periods open positions- 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

Today on the Econ Dude blog we will briefly talk about futures contracts. (futures) and I will give an example of how they work on the stock exchange and when trading.

In fact, most people do not need to know this, since the topic is very specialized. Even economists often do not teach this as part of a general economic theory, because it refers to trading on the stock exchange and more Western. But nevertheless, for everyone who is somehow connected with this trade, either professionally or simply addicted, futures are such a thing that sometimes occurs.

So, the word came from the English futures contract, futures. And this word came from the future - the future. A futures contract is an agreement between two parties to make a deal with security at a predetermined price in future.

These contracts appeared in a rather interesting way and it was connected with. Since the production cycles of grain or cotton are quite long in terms of time, a guarantee of delivery was needed, and it was precisely such contracts that acted as such a guarantee.

Roughly speaking, the owner of the mill and the bakery could agree with the farmer that he would buy grain in 6 months for $1, and the other side would bring the goods at that moment. Such long-term contracts protected suppliers and merchants, allowing for more stable supply chains.

But then curious things happened, there was no longer a shortage of such suppliers and it was possible to buy almost any product at almost any moment, the need for such contracts fell. But everyone liked the very idea of executing the transaction after X time, as it gave more predictability and stability, they picked up this idea.

Such contracts can be called deferred, they are very similar in meaning and mechanics to orders or forwards, but there are some slight differences. Futures in general is like one of the types of forwards, the difference is that futures are traded on the exchange, but forwards are darker, one-time and private transactions outside the exchange.

Index futures traded by Nick Lisson () , and forwards are traded, for example, by importers, for example, entering into these contracts for the purchase of currency in X days, in order to protect themselves from the risk of price fluctuations.

At the same time, you can’t really speculate with forwards, since they are off the exchange, but futures can be sold at any time.

Some people, I had such an acquaintance, traded futures for a long time and did not even understand that they were trading them and what it was. A type of oil futures is bought and sold by a person without even realizing that in fact such a futures involves the delivery of crude oil to him, although in fact it has been under such contracts for a long time almost they don't deliver anything. Such tools inflate the markets, including the oil price market, by laying in it a wild speculative part, when real production, production and consumption cease to play any role in pricing, and everything depends stupidly on the behavior of investors, and not on fundamental factors.

An example of what is a futures (future contract) you can give one.

Consider a classic oil futures contract:

Here I have a friend who traded this without even realizing that they could naturally bring oil to him. I’m joking, of course, because if you trade it through Russia, then everything is most likely done there through an intermediary, and maybe many, but the essence of the futures is precisely that buying one such contract, for example, for $68 now, you will get 1 barrel of crude oil. They will bring pendos by helicopter and pour you through the window.

You can read how exactly the goods are delivered at the time of the execution of the futures if you know English, but personally I was interested in this moment for a long time, and it was very difficult to find information on it, even in English.

And there you can see that the volume of trading in the market is 1.2 million contracts, not that much actually, this is a day trading of 81 million dollars, although on some days it is twice as much. You see there in the picture CLM18 is a futures of 2018, CLM17 was traded that year and so on. It was already a different paper and last year's trading has already passed, and our futures closes in June of the 18th year.

Now the futures is trading at $68, and the real current price is slightly different, this is called spot price, but it's hard to find because many popular sites don't even track it, and often don't mention that they show you the futures price, not the current one.

Here are all futures prices

Russian oil this is Urals, the difference in its price with others is not significant, but it is. Russian oil is not the highest quality, but not the worst either.

So, you can buy all these futures, through a broker and using, for example, MetaTrader, you get access to all the instruments.

It is clear that real oil will not be delivered to you, but there is a buyback mechanism at the end of the contract, plus, many people play in the futures market very speculatively and buy / sell a million times a day.

Each futures contract has a specification. This is a document that contains the main terms of the contract:

Name of the contract;
Contract type (settlement or delivery);
Price (size) contract - the amount of the underlying asset;
Term of circulation - the period during which the contract can be resold or redeemed;
Date of delivery or settlement - the day when the parties to the contract must fulfill their obligations;
Minimum price change (step);
The cost of the minimum step.

You can find all this, for example, on the website investing.com, it looks like this:

Below you see all the parameters of this contract

Now we have the end of April 2018, the 26th. The execution of the contract will be in two months, but the price for it is constantly changing. At this moment, conclude a contract, having bought it, you have a fixed delivery at this price in 2 months. Something goes wrong, and you can sell this futures at a different current price before June.

Futures are also used for the so-called (insurance), since they are executed at a fixed price in the future. Thus, you can be guaranteed to get one part of the equation stable, and play the other more actively, but I will write more about this later in another article.

"Futures are very liquid, volatile and quite risky, so novice investors and traders should not deal with them without proper preparation" -

On the same site, it is reported that there are no real deliveries on futures, but in fact they are, it all depends on the type of futures.

If there is no delivery, then the mechanics of the variation margin works.

When the futures are executed, if there is no delivery, then the current price of the asset is compared with the purchase price of the futures and the exchange automatically calculates the difference, either paying you a premium or taking the money.

For example, if you buy a futures for an asset for $10 now, which is executed in a year, and hold it for a year. Then if the price has already become $15, then you will get $5, and if the price has dropped to $7, then $3 will be taken from you.

It is because of this mechanics that exchanges require margin (Deposit margin - collateral) and margin call can happen - automatic closing of positions. If you have no funds in your account, and your futures fell, while it is still far from execution, then you have huge problems. You must have funds to cover potential losses at the close of the futures, this is a requirement of the exchange and this is exactly what led the Singapore trader Nick Lisson to collapse. And that is why he constantly begged for money in London, precisely to cover this margin, and then forged documents (I'm talking about the movie "Conman" with Ewan McGregor in the title role).

These are the pies. I hope the Econ Dude blog gave adequate examples and explained how futures work, you can find other articles about the economy here.

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Approximate form

Futures contract N ____
(Contract)


G._______________	"__" ____________ ____ G.

Hereinafter referred to as __ "Party 1", represented by ________________, acting __ on the basis of ________________ and a license dated "__" ____________ ____, issued by ________________, on the one hand, and ________________ represented by ________________, acting __ on the basis of ________________ and a license dated "__" ____________ ____ N ____, issued (name, address of the exchange), hereinafter referred to as __ "Party 2", on the other hand, equally referred to as "parties", concluded at the exchange auction ________________ exchanges genuine contract about the following:

1. The Subject of the Agreement

1.1. Each party to the contract is required to pay sums of money depending on the change in the price (prices) and (or) value (values) of the basic (basic) asset and (or) the occurrence of a circumstance that is the basic (basic) asset.

(Options:

a) also, Party 2 undertakes, in the event of a request by Party 1, to transfer to it the underlying (underlying) asset, including by concluding an agreement purchase and sale (delivery) of exchange goods;

b) the parties are also obliged to conclude an agreement that is a derivative financial instrument and constituting the underlying (underlying) asset.)

1.2. Underlying asset: securities (currency, goods): ________________.

1.3. The range of price changes of the underlying (underlying) asset for the premium payment:

1.3.1. In the event of a price increase of at least ________ points (percentage, etc.), Party 2 (or Party 1) pays a premium in the amount of ________________ rubles.

1.3.2. When the price increases over ____________ points (percentage, etc.), the premium in the amount of ____________ rubles is paid by Party 2 (or Party 1).

1.3.3. In the event of a price decrease by ____ points (percentage, etc.), the premium in the amount of ____________ rubles is paid by Party 2 (or Party 1).

1.3.4. When the price is reduced by at least ____________ points (percentage, etc.), the premium in the amount of ____________ rubles is paid by Party 2 (or Party 1).

1.4. The range of price changes of the underlying (underlying) asset for repurchase (or: sale):

1.4.1. Price increase by at least ____________ points (percentage, etc.).

1.4.2. Price increase over ____________ points (percentage, etc.).