Futures question

This is a discussion on Futures question within the Futures & Options forums, part of the Markets category; Hi, (sorry if this is stupid but I'm trying to figure out how futures work). Is there a name to ...

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Old Jul 23, 2009, 3:31pm   #1
 
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Futures question

Hi, (sorry if this is stupid but I'm trying to figure out how futures work). Is there a name to differentiate a futures contract that is a real derivative where the underlying asset is not owned by one of the contract holders from a futures contract that an actual supplier who owns the underlying asset lets say a coffee supplier would take out?

Last edited by traderboy1; Jul 23, 2009 at 3:50pm.
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Old Jul 23, 2009, 3:46pm   #2
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option?
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Old Jul 23, 2009, 4:37pm   #3
 
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You mean as in financial speculators vs hedgers sort of differentiation? But they will have positions in the same futures contract?
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Old Jul 23, 2009, 5:28pm   #4
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Originally Posted by traderboy1 View Post
Is there a name to differentiate a futures contract that is a real derivative where the underlying asset is not owned by one of the contract holders from a futures contract that an actual supplier who owns the underlying asset lets say a coffee supplier would take out?
In the futures market the contracts are all standardized. There's no difference between what you and I trade and what producers and hedgers trade. It's all the same thing. If you're trading OTC forwards then maybe you can do something like that based on counter-party.
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Old Jul 24, 2009, 11:36am   #5
 
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Anyway, just to draw your attention to the fact that for certain commodities exists PHYSICALLY SETTLED CONTRACTS and CASH SETTLED CONTRACTS as well.

For example Light Sweet Crude Oil has two contracts: WS and CL.

If I'm wrong, please correct me. I'd be much obliged.
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Thanks! The following members like this post: Technically Fundamental
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