Review
Futures margin requirements depend on the exchange, the underlying assets, whether the investor is initiating a new position or maintaining a current one, whether the investor is a hedger or a speculator, and whether the position is standalone or the leg or a spread.

It is important to understand how options are valued and quoted in order to effectively trade futures contracts, particularly those related to interest rates or indices.

Price limits and other so-called circuit-breakers have an impact on prices and margin requirements.

A position can be closed through liquidation, delivery or cash settlement.

There is a specified process for closing positions that involves assignment and exercise dates, concepts from the options world.

Quiz

  1. Which is a factor of margin requirement?
    1. Whether the position is speculative or a hedge
    2. Whether a hedger is initiating a position or maintaining one
    3. European- or American-style terms
    4. Time to expiration


  1. A 9-month T-bill has a 6.08% yield with 90 days to maturity. A futures contract for it is trading at $985,100. Which is false?
    1. The bill's intrinsic value is $984,800.
    2. Its IMM index is 93.82.
    3. The time value on its futures contract is $300.
    4. It trades in points and 32nds.


  1. Once a futures contract has risen to its price limit, it may not rise any higher through the expiration date.

True

False

  1. Which is not a way to close a futures position?
    1. Offset
    2. Retender
    3. Cash settlement
    4. Physical delivery


  1. Matching investors in long positions with investors in short positions in advance of physical delivery is called:
    1. pooling
    2. spreading
    3. assignment
    4. expiration


Answers

Related Articles
  1. Investing

    Trading Gold And Silver Futures Contracts

    If you are a hedger or a speculator, gold and silver futures contracts offer a world of profit-making opportunities.
  2. Investing

    Investing in Crude Oil Futures: The Risks and Rewards

    Learn about the risks and rewards of trading oil futures contracts. Read about a few strategies to limit the risk in trading oil futures contracts.
  3. Trading

    The Difference Between Forwards and Futures

    Both forward and futures contracts allow investors to buy or sell an asset at a specific time and price.
  4. Investing

    3 Reasons to Use ETF Options Over Futures (SPY, QQQ)

    Learn about exchange-traded fund (ETF) options and index futures, and why it might be a better decision to use ETF options instead of futures.
  5. Trading

    How to Trade Options on Government Bonds

    A look at trading options on debt instruments, like U.S. Treasury bonds and other government securities.
  6. Investing

    Introduction To Currency Futures

    The forex market is not the only way for investors and traders to participate in foreign exchange.
  7. Trading

    Advantages Of Trading Futures Over Stocks (APPL)

    We look at the top eight advantages of trading futures over stocks.
  8. Trading

    American Vs. European Options

    These two options have many similar characteristics, but it's the differences that are important.
  9. Trading

    An Introduction To Trading Forex Futures

    We explain what forex futures are, where they are traded, and the tools you need to successfully trade these derivatives.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center