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.
- Which is a factor of margin requirement?
- Whether the position is speculative or a hedge
- Whether a hedger is initiating a position or maintaining one
- European- or American-style terms
- Time to expiration
- 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?
- The bill's intrinsic value is $984,800.
- Its IMM index is 93.82.
- The time value on its futures contract is $300.
- It trades in points and 32nds.
- Once a futures contract has risen to its price limit, it may not rise any higher through the expiration date.
- Which is not a way to close a futures position?
- Cash settlement
- Physical delivery
- Matching investors in long positions with investors in short positions in advance of physical delivery is called:
InvestingIf you are a hedger or a speculator, gold and silver futures contracts offer a world of profit-making opportunities.
InvestingLearn about the risks and rewards of trading oil futures contracts. Read about a few strategies to limit the risk in trading oil futures contracts.
TradingBoth forward and futures contracts allow investors to buy or sell an asset at a specific time and price.
InvestingLearn about exchange-traded fund (ETF) options and index futures, and why it might be a better decision to use ETF options instead of futures.
TradingA look at trading options on debt instruments, like U.S. Treasury bonds and other government securities.
InvestingThe forex market is not the only way for investors and traders to participate in foreign exchange.
TradingThese two options have many similar characteristics, but it's the differences that are important.
TradingWe explain what forex futures are, where they are traded, and the tools you need to successfully trade these derivatives.
TradingTest your knowledge with our short selling quiz.