Outright Futures Position

Filed Under:
Dictionary Says

Definition of 'Outright Futures Position'


A long or short trade on an underlying futures contract that has the potential for unlimited profit, but also carries the risk of unlimited losses. Outright futures are also called naked futures because they leave the investor highly exposed. To reduce risk, the investor may choose to purchase a protective, offsetting option or the underlying security itself.



Investopedia Says

Investopedia explains 'Outright Futures Position'


An example of a financial instrument an investor might choose, instead of an outright futures position, is a synthetic long put option. Investors might purchase this type of option when the price of a commodity is expected to drop and they want unlimited potential profit but limited risk. The synthetic will also have much lower up-front costs than an outright futures position. Another alternative to an outright futures position that can sometimes carry less risk is to take a spread position.



comments powered by Disqus
Hot Definitions
  1. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  2. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
  3. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
  4. IPO ETF

    An exchange-traded fund that focuses on stocks that have recently held an initial public offering (IPO). The underlying indexes tracked by IPO ETFs vary from one fund manager to another, but index IPO ETFs are usually passively managed and contain equities that have recently been offered to the public.
  5. IPO ETF

    An exchange-traded fund that focuses on stocks that have recently held an initial public offering (IPO). The underlying indexes tracked by IPO ETFs vary from one fund manager to another, but index IPO ETFs are usually passively managed and contain equities that have recently been offered to the public.
  6. Maritime Law

    A body of laws, conventions and treaties that governs international private business or other matters involving ships, shipping or crimes occurring on open water.
Trading Center