There are two main categories of futures contracts: commodity futures and financial futures. Commodity futures include metals, energy, grains and oil seeds, livestock, and food and fiber. Financial futures include eurodollar futures, U.S. treasury futures, foreign government debt futures, swap futures, forex futures, single stock futures, and index futures. Commodity futures prices are influenced by factors like supply, demand, weather conditions and economic trends, while financial futures provide ways to manage risks related to interest rates, currencies, stocks, and indexes.
This ppt is prepared to provide detailed information regarding Forwards and Futures contracts of Derivatives the topics covered under this are Meaning of Forwards contracts, Underlying Assets of Forwards contracts, FEATURES OF FORWARD CONTRACTS, Tailored made, Why Forwards contracts, FUTURES CONTRACT, What is A Futures Contract, Characteristics of Futures contracts, Mechanism of Trading in Futures Market, Margin requirement, Marking-to-market (M2M), SETTLING A FUTURE POSITION, OFFSETTING, CASH DELIVERY, by Sundar, Assistant Professor of commerce.
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This ppt is prepared to provide detailed information regarding Forwards and Futures contracts of Derivatives the topics covered under this are Meaning of Forwards contracts, Underlying Assets of Forwards contracts, FEATURES OF FORWARD CONTRACTS, Tailored made, Why Forwards contracts, FUTURES CONTRACT, What is A Futures Contract, Characteristics of Futures contracts, Mechanism of Trading in Futures Market, Margin requirement, Marking-to-market (M2M), SETTLING A FUTURE POSITION, OFFSETTING, CASH DELIVERY, by Sundar, Assistant Professor of commerce.
Subscribe to Vision Academy for Video assistance
https://www.youtube.com/channel/UCjzpit_cXjdnzER_165mIiw
Improve the Market Efficiency as the Investorshansongroupus
The financial instruments improve the market efficiency as the investors will sell the richer asset and buy the cheaper one until prices reach equilibrium.
2. TYPES OF FUTURES
CONTRACT
Futures contracts can be broadly
classified into 2 categories
Commodities futures
Financial futures
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. 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. 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, insect's infestation and drought
affect prices of these commodities.
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. 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. 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.