Futures

Example of the futures contract – long position

A market participant believes in the rise of CAC 40 index and buys a futures contract of CAC 40 index, i.e. assumes a long position.
Financial asset of the futures contract – CAC 40 index (10 units of index in one contract).
Price – EUR 3 500 for 1 index unit.
Total value of the contract – EUR 35 000.
Amount of collateral – 20% (EUR 7 000 equivalent in another currency).
Result of the futures contract after one month, if the buyer of the futures decides to sell it, will be as follows:

CAC 40 index change	Profit/loss	Return of the contract
+ EUR 300 (+8.57%)	10 * 300 = EUR 3 000	3 000/7 000 * 100 = 42.85%
+ 100 eur (+2.86 proc.)	10 * 100 = EUR 1 000	1 000/7 000 * 100 = 14.29%
Price remains EUR 3 500	EUR 0, only collateral is repaid	0%
- EUR 100 (-2.86%)	10 * (-100) = -EUR1 000	(-1 000)/7 000 * 100 = -14.29%
- EUR 300 (-8.57%)	10 * (-300) = -EUR 3 000	(-3 000)/7 000 * 100 = -42.85%

Example of the futures contract – short position

A market participant believes in the fall of CAC 40 index and sells a futures contract of CAC 40 index, i.e. assumes a short position index.
Financial asset of the futures contract – CAC 40 index (10 units of index in one contract).
Price – EUR 3 500 for 1 index unit.
Total value of the contract – EUR 35 000.
Amount of collateral – 20% (EUR 7 000 equivalent in another currency).
Result of the futures contract after one month, if the buyer of the futures decides to redeem it, will be as follows:

CAC 40 index change	Profit/loss	Return of the contract
- EUR 300 (-8.57%)	10 * 300 = EUR 3 000	3 000/7 000 * 100 = 42.85%
- EUR 100 (-2.86%)	10 * 100 = EUR 1 000	1 000/7 000 * 100 = 14.29%
Price remains EUR 3 500	EUR 0, only collateral is repaid	0%
+ EUR 100 (+2.86%)	10 * (-100) = -EUR 1 000	(-1 000)/7 000 * 100 = -14.29%
+ EUR 300 (+8.57%)	10 * (-300) = - EUR 3 000	(-3 000)/7 000 * 100 = -42.85%

Comparison of the Futures and Options

	Futures	Option Long
Profit	Unlimited	Unlimited
Loss	Unlimited	Limited
Premium	No	Paid
Mediation fee	Yes	OTC– no Non-OTC – yes
Collateral	Yes	No
Possibility to realise profit or loss at any time during contract validity	Yes	Yes

Futures contract means a contract to buy or sell a specific amount of the financial asset (securities, currencies, equity indices, interest rates, raw materials, etc.) at an agreed price on a given future date. The client buying and selling a futures contract pays to the bank a mediation fee which depends upon the exchange where the particular futures are traded and the amount of purchased or sold contracts.

By concluding a futures contract you risk that due to unfavourable future change of the financial asset price you will have to perform the contract at a price lower than market price and will incur losses.

All conditions of a futures contract, excluding its price, are standardised:

financial assets (securities, currencies, equity indices, interest rates, etc.);
amount of one contract;
last trading day for a futures contract.

Comparison of the Futures and Options

For the purpose of concluding a futures contract, you can:

assume a long position, i.e. buy a futures contract expecting that the market price of a specific financial asset will rise;
Example of the futures contract – long position
assume a short position, i.e. sell a futures contract expecting that the market price of a specific financial asset will fall;
Example of the futures contract – short position
you don’t need to have full amount necessary for concluding the contract, it is enough to hold funds for the submission of collateral and for mediation fee;
use the leverage effect – the value of collateral is smaller than the existing financial asset value and therefore you can get higher profit or incur greater loss than in case of investing into selected financial instruments.

Main conditions of provision of the service

You need an account with Swedbank.
To sign the agreements on the provision of Financial derivatives traded on regulated markets, mediation services and agreements on the provision of electronic services in the nearest Swedbank branch.
Futures contracts may be concluded both, by legal and natural persons. Customers, whose business is related with securities, trade in raw materials (oil products, metal, grain, wood, etc.), currencies, interest rates, etc. can obtain insurance cover against changes in asset prices.

Futures

All conditions of a futures contract, excluding its price, are standardised:

For the purpose of concluding a futures contract, you can:

Main conditions of provision of the service

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Futures

Example of the futures contract – long position

Example of the futures contract – short position

Comparison of the Futures and Options

Option

Long

All conditions of a futures contract, excluding its price, are standardised:

For the purpose of concluding a futures contract, you can:

Main conditions of provision of the service

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Prašome naudoti Google Chrome, Mozilla Firefox ar Microsoft Edge naršykles.

Thank you for the visit!

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