Still Trying to Figure Out What Futures Are, Exactly

Noitartst

Member
53 1
Okay. Futures Contracts are promises of delivery for goods at a certain time. Speculators buy and sell these contracts up until the contract's expiration, based on expectation on whether the goods will go up, or down, hence the term, "speculation." Also, there's more day trading over futures, than for stocks.

I understand that, and little else. Forgive my dumb questions, but I have some inquiries about futures that may seem absurdly stupid, but I'm trying still to figure things out.

Namely, if the speculator hangs on to the contract too long, he'll own not the contract, but the commodity, yes? Then again, he can still sell that, yes? Still, what the speculator does is speculate before the contract's expiration, yes?
 

Dong Mu

Member
91 14
yes, need sell/buy to flat ante delivery, or you got 5000 bushels wheat. lot porridge, feed big family,
 

Noitartst

Member
53 1
want porridge?

Naw; I was fed a lot of cream of wheat, to say nothing of oatmeal, and it bit.

Kidding aside, I take it, no; you do not want to hold on too long, or will be signing up for tasteless dieting.
 

timsk

Legendary member
7,600 2,375
Namely, if the speculator hangs on to the contract too long, he'll own not the contract, but the commodity, yes? Then again, he can still sell that, yes? Still, what the speculator does is speculate before the contract's expiration, yes?
Hi Noitartst,
If you're trading a derivative product - such as CFDs - or a product such as spread betting, you'll never take actual delivery of bushels of wheat, pork bellies, orange juice, coffee or whatever the case may be. Your position will just be closed out automatically by your broker for a profit or loss and your account will be credited or debated accordingly.

For the possibility of taking actual delivery of the instrument being traded to occur, you'll have to be trading directly into the futures market via a direct market access broker. Under these circumstances, rather than explain what happens upon expiration here - check out this FT article: A Crash Course in Commodities by Carley Garner.

Hope that answers your question?
Tim.
 

jamil005

Junior member
27 2
Re: Noitartst

if you are interested to carry your trade you can roll over to next month futures which is initiated mostly around 8 days before expiration.
or you can use Andre hall (the oil trader) technique to carry his trade for long period by going long/short in CL 2019 (i think march is offered) and well its expiration will be surely after 5 years . ;)
 

Noitartst

Member
53 1
Thank you; this info is genuinely helpful. I hear that if you are stuck with a commodity at the time of a contract's expiration, there are processes to deal with it, but with a fine, which is logical.

My questions may seem boneheaded, but they ain't in vain.
 

Noitartst

Member
53 1
Well, it seems so, after having read up on it, though I wish I knew what the value of a trader is, exactly. I know that a speculator serves to regulate the market even as he proceeds to make his pile, and I was wondering how. The speculator, in this way, becomes like a beaver, regulating water flow, even as he just advance his own, beaverly interests.

I was cutrious about this, the ecosytem effect of good trading.
 
 
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