Types of futures contract


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Types of futures contract

  1. 1. Types of futures contract PGDM 2010-2012 ITM BUSINESS SCHOOL
  2. 2. TYPES OF FUTURES CONTRACTFutures contracts can be broadly classified into 2 categories Commodities futures Financial futures
  3. 3. Commodity futures Metals Major metals traded with futures contracts include copper, gold, platinum, palladium and silver, which are listed on the New York Mercantile Exchange which has merged with the Chicago Mercantile Exchange. Energy The most popular energy futures contracts are crude oil, crude palm oil, heating oil and natural gas. They have become an important indicator of world economic and political developments and are very much influenced by producing nations such as Malaysia.
  4. 4. Commodity futures Grains & Oil Seeds Grains such as soybeans and oil seeds are essential to food and feed supplies, and prices are sensitive to the weather conditions, and also to economic conditions that affect demand. Because corn is integral to the increasing popularity of ethanol fuel, the grain markets also are affected by the energy markets and the demand for fuel. Livestock Commodity futures on live cattle, feeder cattle, lean hogs and pork bellies are commodities traded at CME Group Inc and prices are affected by consumer demand, competing protein sources, price of feed, and factors that influence the number of animals born and sent to market, such as disease and weather.
  5. 5. Commodity futures Food and Fiber The food and fiber category for futures trading includes cocoa, coffee, cotton and sugar. In addition to consumer demand globally, factors such as disease, insects infestation and drought affect prices of these commodities.
  6. 6. Financial futures Eurodollar Futures Eurodollar futures are U.S. dollars that are deposited outside the country in commercial banks mainly in Europe which are known to settle international transactions. They are not guaranteed by any government but only by the obligation of the bank that is holding them. U.S. Treasury Futures Because U.S. Dollars is the reserved currency for most countries, the stability of the dollars allows for treasury futures market and instruments such as treasury bonds and treasury bills.
  7. 7. TYPES OF FINANCIAL FUTURES Foreign Government Debt Futures Most government issue debt that are corresponded to the futures markets that are listed around the world. Swap Futures This is generally agreements that are between two parties to exchange periodic interest payments or Forex Futures This type of futures is to manage the risks and take advantage of related forex exchange rate fluctuations.
  8. 8. TYPES OF FINANCIAL FUTURES Single Stock Futures Most popular futures contracts are related to the equity markets, they are also known as security futures. Index Futures Futures that are based on the stock index.