Futures Flashcards
1
Q
Forward
A
a deferred delivery sale where the price is agreed upon
2
Q
Futures
A
similar to forward but feature formalised and standardised contracts
3
Q
what is a futures contract?
A
an obligation to make or take delivery of the underlying asset at a price
4
Q
Long
A
a commitment to purchase the commodity on the delivery date
5
Q
Short
A
commitment to sell the commodity on the delivery date
6
Q
How do you work out profit on the long
A
price at maturity - original future price
7
Q
How do you work out profit on the short
A
original future price - price at maturity
8
Q
Trading strategies
A
speculators- profit off price movement
Hedgers- protection from price movement
