Long Position: This commits the buyer to purchase.
Key features of Futures contracts:
Intermediation by the Exchange.
Marking to market.Standardization: It is standardized, so that it can be traded in the stock exchange.Intermediation by the exchange:Price Limits:Margin Requirements: (Initial Margin)Marking to market: while the forward contracts are settled down the maturity date futurescontracts are ‘marked to market’ on a periodic basis. This means that profits and losses on futurecontracts are settled on a periodic basis.
Types of Future Contracts – (The Global scene types of Futures)
1.Commodity Futures2.Financial Futures.
A commodity futures is a future contract in commodities like agricultural products, metals and mineral etc. Some of the will established commodity exchanges are asfollows.
London Metal Exchange (LME) – to deal in gold.
Chicago Board of Trade (CBT) – to deal in Soya bean oil.
New York cotton Exchange – to deal in cotton.
Commodity exchange in New York (COMEX) – to deal in agricultural products.
International Petroleum Exchange of London (IPE) – to deal in crude oil.
Financial futures refer to a futures contract in foreign exchange or financialinstruments like Treasury bill, commercial paper, stock market index or interest rate.Some of the well established financial futures exchanges are the following;1.International Monetary Market (IMM) to deal in US treasury bills, Euro dollar depositsetc.2.London International Financial futures exchange (LIFFE) to deal in Euro dollar deposits.3.New York Futures Exchange (NYFE) to deal in Euro dollar deposits etc.
Types of Future Contracts – (In Indian Context)
Buyer of thecontractFutureExchangeSeller of thecontract