Futures are contracts entered into for the delivery of certain goods in the future at fixed prices.

According to these contracts, one party will buy an asset in the future at a specific time and in a specific volume, and the other party will deliver it at the appointed time and in the required volume.

The main purpose of futures is to minimize the buyer’s risks in case of a possible deterioration of the market situation by fixing the price of the product today.

Confirmation of the intentions of the parties is the payment of a guarantee (collateral) for the fulfillment of a future obligation.

Historically, for the first time, futures became the basis of trading relationships between farmers, who, by fixing prices for raw materials, ensured profit from the sale of the future harvest - by setting the price for products at the beginning of the season, the farmer could plan his seasonal budget, his profit and current expenses.

At the moment, futures are constantly used in trading various commodities and financial assets around the world.

Today, futures trading is largely speculative in nature, since its main goal is to make a profit.

Depending on the subject of the transaction The following are the most popular types of futures on world trading exchanges:

• currency futures;
• futures on securities;
• metal futures;
• oil futures;
• futures for grain crops.

Wherein depending on the purpose of compilation futures are divided into:

• settlement futures, which are used when the parties make exclusively monetary settlements;
• deliverable futures, which are used for the purchase and sale of certain volumes (quantities) of underlying assets (securities, oil, gold, currency, and so on).

Watch a short video that explains in simple terms what futures are.

Largest futures exchanges

Futures trading today it is carried out all over the world through the use of various exchanges, among which are:

• New York Mercantile Exchange - NYMEX;
• Derivatives Commodity Exchange in Chicago - SWOT;
• Chicago Mercantile Exchange - CME;
• London International Financial Futures Exchange - LIFFE;
• International Petroleum Exchange in London - IPE;
• London Metal Exchange - LME.

Futures Trading Basics

To trade futures, you need knowledge and understanding of the basic principles used in exchange trading:

1. Exchange where futures trading takes place– it is important to know the volumes and operating hours of exchanges trading specific goods.
2. Unit of measurement of a futures contract– exchanges trade not in contracts and goods, but in lots. Each futures contract has a standardized size: for example, gold is ounces, oil is barrels, euro is euro, etc.
3. Teak size. A tick is the minimum price change value. For example, a tick on the E-mini S&P 500 futures is equal to 0.25 index points (with an index point of $50, the tick would be $12.5).

Accordingly, each asset has its own tick, for example, for the pound or euro it is 0.0001.

1. Margin. In general, the presence of a margin means that when entering a position, part of the funds from the deposit is blocked to maintain it. For futures, a margin is also set for maintaining a position throughout the day and for rolling it over to the next day.
2. Futures trading time– exchanges establish “trading break” periods. For example, for S&P - 00:15-00:30 Moscow time, for currencies - 01:00-02:00 Moscow time, etc.
3. Time for the most active futures trading– there are periods of time when the largest infusions for specific contracts are provided and the strongest intra-session trends are created. You need to know these time frames so that futures trading can bring you maximum income (for example, for currencies - 10:00 and 16:00 Moscow time, for indices - 17:30 Moscow time).

How to make money on futures

To understand how to make money on futures, you need to understand the following points.

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Widerulerapplying toFORTSfuturesAndoptionsattractsattentionTothismarketmanynewpotentialparticipants. After all, it’s hereatthemThere isopportunitytradeinaccessibleon other exchangesassets: indexRTS, gold, oil, interestrates. However, these instruments are somewhat more complex than stocks and bonds, but also potentially more profitable.Let's start with something simpler - futures.

For most people, even those who have been working in the financial market for a long time, the words futures, options, derivatives are associated with something extremely distant, incomprehensible and little related to their daily activities. Meanwhile, almost everyone, one way or another, has encountered derivatives.

The simplest example: many of us are accustomed to monitoring the dynamics of the global oil market at the prices of standard grades - Brent or WTI (Light Crude). But not everyone knows that when they talk about the rise/fall of commodity prices in London or New York, we are talking about oil futures prices.

Forwhatneededfutures

The meaning of a futures contract is extremely simple - two parties enter into a transaction (contract) on the exchange, agreeing on the purchase and sale of a certain commodity after a certain period at an agreed fixed price. Such a commodity is called the underlying asset. In this case, the main parameter of the futures contract that the parties agree on is precisely its execution price. When concluding a transaction, market participants can pursue one of two goals.

For some, the goal is to determine a mutually acceptable price at which actual delivery of the underlying asset will occur on the day the contract is executed. By agreeing on a price in advance, the parties insure themselves against possible unfavorable changes in the market price by the specified date. In this case, none of the participants seeks to make a profit from the futures transaction itself, but is interested in its execution in such a way that pre-planned indicators are met. It is obvious that, for example, manufacturing enterprises purchasing or selling raw materials and energy resources are guided by this logic when concluding futures contracts.

For another type of derivatives market participant, the goal is to make money on the movement of the price of the underlying asset during the period from the moment the transaction is concluded to its closure. A player who managed to correctly predict the price, on the day the futures contract is executed, gets the opportunity to buy or sell the underlying asset at a better price, and therefore make speculative profit. Obviously, the second party to the transaction will be forced to complete it at an unfavorable price for itself and, accordingly, will incur losses.

It is clear that in the event of an unfavorable development of events for one of the participants, he may be tempted to evade fulfillment of obligations. This is unacceptable for the more successful player, since his profit is formed precisely from the funds paid by the loser. Since at the time of concluding a futures contract both participants expect to win, they are simultaneously interested in insuring the transaction against the dishonest behavior of the party suffering losses.

The issue of counterparty risks directly faces not only speculators, but also companies that insure (hedge) against unfavorable price changes. In principle, it would be enough for representatives of a real business to seal the agreement with a strong handshake and the company seal. This bilateral over-the-counter transaction is called a forward contract. However, the greed of one of the parties may turn out to be insurmountable: why suffer a loss under the contract if your forecast did not come true and you, for example, could sell the goods at a higher price than agreed in the forward. In this case, the second party to the transaction will have to initiate lengthy legal proceedings.

Clearingcenter

The optimal solution to the problem of guarantees is to involve an independent arbitrator, whose main role is to ensure that the parties fulfill their obligations, regardless of how great the losses of one of the participants are. It is this function in the futures market that is performed by the exchange clearing center (CC). The futures contract is entered into on the exchange system, and the clearing center ensures that each trading participant fulfills its obligations on the settlement day. Acting as a guarantor of contract execution, the clearing center ensures that the successful speculator or hedger (the insuring party) receives the money earned, regardless of the behavior of the other party to the transaction.

From a legal point of view, when making a transaction on the stock exchange, traders do not enter into a contract with each other - for each of them, the other party to the transaction is the clearing center: for the buyer, the seller and, conversely, for the seller, the buyer (see Fig. 1). In the event of claims arising in connection with the failure of the futures contract by the opposite party, the exchange player will demand compensation for lost profits from the clearing center as the central party for transactions for all market participants (there are special funds for this in the clearing center).

Clearing house arbitration also protects bidders from a theoretical stalemate in which both parties cannot fulfill their contractual obligations. De jure and de facto, when concluding a futures transaction on the exchange, a trader is not associated with a specific counterparty. The clearing center acts as the main connecting element in the market, where an equal volume of long and short positions makes it possible to depersonalize the market for each participant and guarantee the fulfillment of obligations by both parties.

In addition, it is the absence of a link to a specific counterparty that allows a market participant to exit a position by concluding an offset transaction with any player (and not just the one against whom the position was opened). For example, you had a buy futures open. To close a long position you need to sell the futures contract. If you sell it to a new participant: your obligations are canceled, and the clearing house remains short against the new player's long position. At the same time, no changes occur in the account of the participant who sold the contract at the time when you first opened the position - he remains with a short futures against the long position of the clearing center.

Warrantysecurity

Such a system of guarantees, of course, is beneficial to market participants, but is associated with great risks for the clearing center. Indeed, if the losing party refuses to pay the debt, the CC has no other way than to pay the profit to the winning trader from its own funds and begin legal proceedings against the debtor. Such a development of events is certainly not desirable, so the clearing center is forced to insure the corresponding risk even at the time of concluding the futures contract. For this purpose, the so-called guarantee security (GS) is collected from each of the trading participants at the time of purchase and sale of futures. In fact, it represents a security deposit that will be lost by the participant who refuses to pay the debt. For this reason, the margin is also often referred to as deposit margin (the third term is initial margin, since it is charged when a position is opened).

In case of default of the losing party, it is from the funds of the deposit margin that the profit will be paid to the other party to the transaction.

The guarantee performs another important function - determining the permissible volume of the transaction. Obviously, when concluding an agreement for the purchase and sale of an underlying asset in the future, no transfer of funds between counterparties occurs until the contract is executed. However, there is a need to “control” the volume of transactions so that unsecured obligations do not arise in the market. Insurance that the participants who entered into futures contracts intend to execute them, and that they have the necessary funds and assets for this, is the guarantee, which, depending on the instrument, ranges from 2 to 30% of the contract value.

Thus, having 10 thousand rubles in your account, a trading participant will not be able to speculate in stock futures worth, for example, 1 million rubles, but will actually be able to make margin transactions with a leverage of up to 1 to 6.7 (see Table 1), which significantly exceeds his investment capabilities in the stock market. However, an increase in financial leverage naturally entails a proportional increase in risks, which must be clearly understood. It should also be noted that the minimum base GO rate can be increased by the decision of the exchange, for example, if futures volatility increases.

Table 1 Warranty provision in FORTS

(minimum base size of the GO as a percentage of the value of the futures contract and the corresponding leverage)
Underlying asset	Pre-crisis parameters*		Current parameters in a crisis
Stock market section
RTS Index
Industry index for oil and gas
Industry indices for telecommunications and trade and consumer goods
Ordinary shares of OJSC Gazprom, NK LUKoil, OJSC Sebrbank of Russia
OJSC OGK-3, OJSC OGK-4, OJSC OGK-5
Ordinary shares of MMC Norilsk Nickel, OJSC NK Rosneft, OJSC Surgutneftegaz, OJSC VTB Bank
Preferred shares of Transneft OJSC, Sberbank of Russia OJSC
Ordinary shares of MTS OJSC, NOVATEK OJSC, Polyus Gold OJSC, Uralsvyazinform OJSC, RusHydro OJSC, Tatneft OJSC, Severstal OJSC, Rostelecom OJSC
Shares of companies in the electric power industry
Federal loan bonds issued OFZ-PD No. 25061
Federal loan bonds issued OFZ-PD No. 26199
Federal loan bonds issued OFZ-AD No. 46018
Federal loan bonds issued OFZ-AD No. 46020
Federal loan bonds issued OFZ-AD No. 46021
Bonds of Gazprom OJSC, FGC UES OJSC, Russian Railways OJSC, as well as bonds of the City Bonded (Internal) Loan of Moscow and Moscow Regional Internal Bonded Loans
Commodity market section
Gold (refined bullion), sugar
Silver (refined bullion), diesel, platinum (refined bullion), palladium (refined bullion)
URALS grade oil, BRENT grade oil
Money Market Section
US dollar to ruble exchange rate, euro to ruble exchange rate, euro to US dollar exchange rate
Average interbank overnight loan rate MosIBOR*,
MosPrime 3-month loan rate*

* For futures on interest rates, other methods are used to determine the size of leverage (a separate article will be devoted to these instruments in the future).

Variationalmargin, orHowis formedprofit

Managing your own risks is the prerogative of the bidder. However, the risks associated with the fulfillment of his obligations to other traders, as mentioned above, are monitored by the clearing center. It is obvious that the amount of collateral contributed by the player when concluding a futures contract is directly related to the volatility of the underlying instrument. Thus, when trading stock futures, you will have to make a security deposit of 15-20% of the contract value.

When concluding futures linked to significantly less volatile assets (for example, government bonds, the US dollar or short-term interest rates), the required margin may be 2-4% of the contract value. However, the problem is that the price of each futures contract is constantly changing, just like any other exchange-traded instrument. As a result, the exchange clearing center faces the task of maintaining the collateral contributed by the transaction participants in an amount corresponding to the risk of open positions. The clearing center achieves this compliance by daily calculation of the so-called variation margin.

Variation margin is defined as the difference between the settlement price of a futures contract in the current trading session and its settlement price the day before. It is awarded to those whose position turned out to be profitable today, and is written off from the accounts of those whose forecast did not come true. With the help of this margin fund, one of the participants in the transaction extracts speculative profit even before the expiration date of the contract (and, by the way, has the right at this time to use it at his own discretion, for example, to open new positions). The other party suffers a financial loss. And if it turns out that there are not enough free funds in his account to cover the loss (the participant has guaranteed the futures contract in the amount of his entire account), the variation margin is charged from the guarantee collateral. In this case, the exchange clearing center, in order to restore the required amount of the security deposit, will require additional money (issue a margin call).

In the above example (see How the variation margin flows..) with futures for shares of MMC Norilsk Nickel, both participants entered into a deal, blocking 100% of cash in the GO for these purposes. This is a simplified and uncomfortable situation for both parties, since transferring the variation margin will oblige one of them to urgently replenish the account the very next day. For this reason, most players manage their portfolios in such a way that there is enough free cash flow, at a minimum, to compensate for random fluctuations in the variation margin.

Execution (supply) Andearlyexitfrompositions

Based on the execution method, futures are divided into two types – delivery and settlement. When executing supply contracts, each participant must have appropriate resources. The clearing center identifies pairs of buyers and sellers who must conduct transactions with each other in the underlying asset. If the buyer does not have all the necessary funds or the seller does not have a sufficient amount of the underlying asset, the clearing center has the right to fine the participant who refused to execute the futures in the amount of the collateral. This penalty goes to the other party as compensation for the fact that the contract was not performed.

For deliverable futures in FORTS, five days before their execution, the target price increases by 1.5 times to make the alternative of not taking delivery completely unprofitable compared to possible losses from price movements in an unfavorable direction. For example, for stock futures the margin increases from 15 to 22.5%. These contracts are unlikely to accumulate such a huge loss in one trading day.

Therefore, players who are not interested in actual delivery often prefer to get rid of their obligations under the contract before its completion date. To do this, it is enough to make a so-called offset transaction, within the framework of which a contract is concluded, equal in volume to the previously concluded one, but opposite to it in the direction of the position. This is how most futures market participants close their positions. For example, on the New York Mercantile Exchange (NYMEX), no more than 1% of the average volume of open positions in WTI (Light Crude) oil futures reaches delivery.

With settlement futures, for which there is no delivery of the underlying asset, everything is much simpler. They are executed through financial settlements - just like during the life of the contract, trading participants are accrued a variation margin. Therefore, under such contracts, the guarantee is not increased on the eve of execution. The only difference from the usual procedure for calculating variation margin is that the final settlement price is determined not based on the current futures price, but on the price of the cash (spot) market. For example, for futures on the RTS index - this is the average index value for the last hour of trading on the last trading day for a specific futures; for futures for gold and silver - the value of the London Fixing (London Fixing is one of the main benchmarks for the entire global precious metals market).

All stock and bond futures traded on FORTS are deliverable. Contracts for stock indexes and interest rates, which by their nature cannot be executed by delivery, are, of course, settlement. Futures for commodity assets are both settlement (for gold, silver, Urals and Brent oil) and delivery - futures for diesel fuel with delivery in Moscow, for sugar.

Pricingfutures

Futures prices follow the price of the underlying asset in the spot market. Let's consider this issue using the example of contracts for Gazprom shares (the volume of one futures contract is 100 shares). As can be seen in Fig. 2, the futures price almost always exceeds the spot price by a certain amount, which is usually called the basis. This is due to the fact that the risk-free interest rate plays a large role in the formula for calculating the fair futures price per share:

F=N*S*(1+r1) - N*div*(1+r2),

where N is the volume of the futures contract (number of shares), F is the futures price; S – spot price of the share; r1 – interest rate for the period from the date of conclusion of a transaction under a futures contract until its execution; div – amount of dividends on the underlying share; r2 – interest rate for the period from the day the register of shareholders is closed (“cut-off”) until the execution of the futures contract.

The formula is given taking into account the influence of dividend payments. However, if dividends are not paid during the trading period of the futures, then they do not need to be taken into account when determining the price. Typically, dividends are taken into account only for June contracts, but recently, due to the low dividend yield of shares of Russian issuers, the impact of these payments on the price of futures is extremely low. The role of the risk-free interest rate, on the contrary, remains very important. As you can see in the chart, the size of the basis gradually decreases as the futures expiration date approaches. This is explained by the fact that the basis depends on the interest rate and the period until the end of the contract - every day the value expression of the interest rate decreases. And by the day of execution, the prices of the futures and the underlying asset, as a rule, converge.

“Fair” prices in the futures market are set under the influence of participants conducting arbitrage operations (usually large banks and investment companies). For example, if the futures price differs from the stock price by more than the risk-free rate, arbitrageurs will sell futures contracts and buy shares in the spot market. To quickly carry out the operation, the bank will need a loan to purchase securities (it will be paid off from income from arbitrage transactions - that is why the interest rate is included in the futures price formula).

The position of the arbitrageur is neutral in relation to the direction of market movement, since it does not depend on exchange rate fluctuations of either the stock or futures. On the day the contract is executed, the bank will simply deliver the purchased shares against the futures, and then pay off the loan. The final profit of the arbitrageur will be equal to the difference between the purchase prices of shares and the sale of futures minus the interest on the loan.

If the futures are too cheap, then the bank that has the underlying asset in its portfolio has a chance to earn a risk-free profit. He just needs to sell the shares and buy futures instead. The arbitrageur will place the freed funds (the price of the sold shares minus the collateral) on the interbank lending market at a risk-free interest rate and thereby make a profit.

However, in some situations, the basis may “detach” from the interest rate and become either too high (contango) or, on the contrary, go into the negative area (backwardation - if the futures price is lower than the value of the underlying asset). Such imbalances occur when the market is expected to move strongly up or down. In such situations, the futures may outpace the underlying asset in terms of growth/decline, since the costs of operations on the derivatives market are lower than on the spot market. With a massive onslaught from only one side (either buyers or sellers), even the actions of arbitrageurs will not be enough to bring the futures price to a “fair” price.

Conclusion

Just five years ago, the instruments of the futures and options market in Russia were limited, in fact, only to contracts for shares, so the derivatives market was forced to compete for clientele with the stock market. There were two main arguments for choosing futures: increasing financial leverage and reducing associated costs. Options have many more competitive advantages: the ability to earn income during a sideways trend, volatility trading, maximum leverage effect and much more, but options also require much more preparation.

The situation with futures changed dramatically when contracts for stock indices, commodities, currencies and interest rates appeared. They have no analogues in other segments of the financial market, and trading in such instruments is interesting to a wide range of participants.

Derivatives market – a segment of the financial market in which derivatives contracts are concluded

A derivative instrument (derivative, from the English derivative) is a financial instrument whose price depends on a certain underlying asset. The best known are futures and options - futures contracts (agreements) that define the conditions for concluding a transaction with the underlying asset at a certain point in time in the future, such as price, volume, term and procedure for mutual settlements. Until the expiration date (circulation), futures and options themselves act as financial instruments that have their own price - they can be resold (assigned) to other market participants. The main exchange platform for derivatives in Russia is the Futures and Options market on the RTS (FORTS).

A futures contract (from the English future - future) is a standard exchange contract under which the parties to a transaction undertake to buy or sell an underlying asset at a certain (set by the exchange) date in the future at a price agreed upon at the time of conclusion of the contract. Typically, futures are traded on the exchange with several expiration dates, mostly tied to the middle of the last month of the quarter: September, December, March and June. However, liquidity and principal turnover are typically concentrated in contracts with the nearest expiration date (the expiration month is indicated in the futures code).

Open position (Open Interest)

When buying or selling a futures, traders have an obligation to buy or sell the underlying asset (such as a stock) at an agreed upon price, or, as the industry lingo puts it, “take a buy or sell position.” The position remains open until the contract is executed or until the trader enters into a deal opposite to this position (an Offset Deal).

Long position

A trader entering into a futures contract to buy an underlying asset (buying a futures) opens a long position. This position obliges the owner of the contract to buy an asset at an agreed price at a certain point in time (on the day the futures contract is executed).

Short position

Occurs when a futures contract is concluded to sell the underlying asset (when selling contracts), if purchase positions were not previously opened (long positions). With the help of futures, you can open a short position without having the underlying asset. A trader can: a) acquire the underlying asset shortly before the futures are executed; b) close the short futures position ahead of schedule with an offset transaction, fixing your financial result.

The essence of futures using gold as an example

In three to four months, a jeweler will need 100 troy ounces of gold to make jewelry (1 ounce = 31.10348 grams). Let's say it's August and one ounce costs $650, and the jeweler fears it will rise to $700. He does not have $65,000 available to buy precious metal in reserve. The solution is to conclude 100 futures contracts on the exchange for the purchase of gold with execution in mid-December (the volume of one contract is equal to one ounce).

Those. The jeweler will need all the necessary funds only by the end of the year. Until this date, he will only need to keep a guarantee collateral (collateral) on the exchange, the amount of which will be $6,500 - 10% of the cost of 100 futures (for more information about the guarantee collateral, see Table 1). Who will sell futures to the jeweler? This could be a stock speculator or a gold mining company that plans to sell a batch of the precious metal in December, but is afraid of falling prices. For her, this is an excellent opportunity to fix in advance the level of income from the sale of goods that have not yet been produced.

Fromstories

The principles of organizing futures trading that are used today on exchanges appeared in the USA in the 19th century. In 1848, the Chicago Board of Trade (CBOT) was founded. At first, only real goods were traded on it, and in 1851 the first futures contracts appeared. At the first stage, they were concluded on individual terms and were not unified. In 1865, the CBOT introduced standardized contracts, which were called futures. The futures specification indicated the quantity, quality, time and place of delivery of the goods.

Initially, contracts for agricultural products were traded on the futures market - it was precisely because of the seasonality of this sector of the economy that the need for contracts for future deliveries arose. Then the principle of organizing futures trading was used for other underlying assets: metals, energy resources, currencies, securities, stock indices and interest rates.

It is worth noting that agreements on future prices for goods appeared long before modern futures: they were concluded at medieval fairs in Flanders and Champagne in the 12th century. Some kind of futures existed at the beginning of the 17th century in Holland during the “tulip mania”, when entire segments of the population were obsessed with the fashion for tulips, and these flowers themselves were worth a considerable fortune. At that time, not only tulips were traded on the exchanges, but also contracts for future harvests. At the peak of this mania, which ended with an economic downturn, more tulips were sold in the form of fixed-term contracts than could grow on all the arable land in Holland.

At the beginning of the 18th century in Japan, rice coupons (cards) began to be issued and circulated on the Osaka exchange - in fact, these were the first futures contracts in history. The coupons represented buyers' rights to a crop of still-growing rice. The exchange had rules that determined the delivery time, variety and quantity of rice for each contract. It was rice futures, which were the subject of active speculation, that led to the emergence of the famous Japanese candlesticks and technical analysis.

Market adjustment. Market revaluation system (Mark-to-Market)

A system used on futures exchanges that aims to prevent large losses from occurring on open futures or options positions. Every day during a clearing session, the Clearing Center records the settlement price of futures contracts and compares it with the price of opening a position by the trading participant (if the position was opened during this trading session) or with the settlement price of the previous trading session. The difference between these prices (variation margin) is debited from the account of the participant who has a losing position open, and is credited to the account of the participant who has a profitable position. During the clearing session, simultaneously with the transfer of the variation margin, the amount of the collateral in monetary terms is also revised (by multiplying the settlement price by the GO rate as a percentage).

The market revaluation system also makes it possible to significantly simplify the procedure for calculating profit and loss on offset transactions - the clearing center does not need to store information about who, when and against whom opened a particular position. It is enough to know what positions the participants had before the start of the current trading session (within the framework of a futures contract for one underlying asset with a specific execution date, the positions of all players are taken into account at the same price - at the settlement price of the previous trading session). And for further calculations, the exchange and the CC need the prices and volumes of transactions of only one current trading day.

Leverage or Financial Leverage

Shows how many times the client’s own funds are less than the cost of the underlying asset being purchased or sold. For futures contracts, leverage is calculated as the ratio of the size of the collateral (initial margin) to the contract value.

In the case of futures, leverage arises not due to the fact that the client takes a loan from a brokerage company or bank, but due to the fact that to open a position on the exchange it is not necessary to pay 100% of the value of the underlying asset - you need to provide a collateral.

Margin call or additional collateral requirement (Margin Call)

A requirement of a brokerage company to a client or a clearing center to a clearing participant to increase funds to the minimum balance to maintain an open position.

Rollover

Transferring an open position to a contract with the next expiration month. Allows you to use futures as a tool for holding long-term positions - both long and short. With rollover, you can invest for the long term in underlying assets that are difficult to access in the cash market or are associated with higher costs (for example, gold, silver, oil).

How the variation margin flows and the collateral is reset (using the example of futures for shares of MMC Norilsk Nickel)

Let's say two trading participants entered into a futures contract for the supply of 10 shares of MMC Norilsk Nickel at a fixed price with execution in September 2007. At the time of the agreement, the futures price was 35,000 rubles. Since the guarantee for this instrument is set at 20% of its value, each trader must have 7,000 rubles in his account to participate in the transaction (see Table 1). The clearing center reserves (blocks) these funds to guarantee the fulfillment of the parties' obligations.

The next day, trading closed at 34,800 rubles. Thus, the futures price decreased, and the situation was favorable for the participant who opened a short position. A variation margin of 200 rubles, which is the difference between the settlement prices of the first and second days, is transferred to the seller, and his deposit is increased to 7,200 rubles. Since funds are debited from the futures buyer's account, his deposit is reduced to 6,800 rubles. From the point of view of the clearing center, this situation is unacceptable, since the guarantee security of each participant must be maintained in an amount of at least 20% of the current contract value, which is 6,960 rubles with a futures price of 34,800 rubles. Therefore, the clearing center will require the buyer of the futures to replenish the account in the amount of at least 160 rubles. Otherwise, his position will be forcibly closed by the broker.

On the third day, prices rise and the contract for the supply of 10 shares of MMC Norilsk Nickel costs 35,300 rubles at the end of trading. This means that the situation has changed in favor of the futures buyer, and he will be credited with a variation margin in the amount of 500 rubles or the difference between 35,300 and 34,800 rubles. Thus, the buyer’s account will have 7,300 rubles. The seller, on the contrary, will reduce his funds to 6,700 rubles, which is significantly less than the required deposit margin, which now amounts to 7,060 rubles (20% of the contract price of 35,300 rubles). The clearing center will require the seller to replenish the guarantee in the amount of at least 360 rubles, and the buyer, in turn, can dispose of available funds in the amount of 240 rubles (account funds - 7300 minus GO - 7060 rubles).

Let's assume that on the fourth day both participants decided to close their positions. The transaction price was 35,200 rubles. When it is completed, the variation margin is transferred for the last time: 100 rubles are debited from the buyer’s account and transferred to the seller. At the same time, the guarantee collateral of both participants is released, and the entire volume of remaining funds becomes free for use: they can be withdrawn from the exchange or new positions can be opened for them. The financial result of the operations for the buyer was expressed in 200 rubles of profit received in the form of variation margin (-200+500-100 or 35,200-35,000 rubles), and the seller suffered a loss in the same amount.

Table 2 Movement of funds on long and short positions in the futures for 1000 shares of MMC Norilsk Nickel

	Price futures	Warranty (20%)	Buyer				Salesman
			Account funds		Variation margin	Available funds	Account funds		Variation margin	Available funds
			before updates	after updates			before updates	after updates

Execution price of supply contracts

At the very beginning of the article, we stipulated that when concluding a futures contract, the parties agree in advance on the delivery price. From an economic point of view, this is how it turns out, but from the point of view of the movement of money in the accounts of market participants, the situation looks a little different. Let's consider the situation using the example of the same September futures for shares of MMC Norilsk Nickel. Let’s say that after two traders entered into a contract at the end of July at a price of 35,000 rubles, by mid-September the futures price rose to 40,000 rubles and at the close of the session on the last day of trading (September 14) it stopped at this level. It is at this price that the delivery will be made - the buyer will pay the seller 40,000 rubles for 10 shares of MMC Norilsk Nickel. But while holding a long position, the buyer will receive a positive variation margin in the amount of 5,000 rubles (40,000-35,000) - the clearing center will write it off from the seller’s account. Therefore, the buyer will have an increase on his deposit to compensate for the increase in the cost of delivery compared to the price of the original transaction.

Today on the Econ Dude blog we will talk briefly about futures contracts (futures) and I will give an example of how they work on the stock exchange and when trading.

In fact, most people do not need to know this, since the topic is very specialized. Even economists often do not teach this within the framework of general economic theory, because it relates to trading on the stock exchange and is more Western. But nevertheless, for everyone who is somehow connected with this trade, either professionally or just interested, futures are a thing that sometimes comes up.

So, the word comes from the English futures contract, futures. And this word came from future - the future. A futures contract is an agreement between two parties to transact a security at a predetermined price. in future.

These contracts appeared in a rather interesting way and it was connected with. Since the production cycles of grain or cotton are quite long in terms of time, a guarantee of delivery was needed, and such contracts were such a guarantee.

Roughly speaking, the owner of the mill and bakery could agree with the farmer that he would buy grain in 6 months for $1, and the other party would deliver the goods at that moment. Such long-term contracts protected suppliers and sellers, allowing for more stable supply chains.

But then curious things happened: there was no longer a shortage of such suppliers and it was possible to buy almost any product at almost any time, the need for such contracts fell. But everyone liked the idea of ​​executing a transaction after X amount of time because it gave more predictability and stability, and they picked up on this idea.

Such contracts can be called deferred; they are very close in meaning and mechanics to orders or forwards, but there are also slight differences. Futures in general are like one of the types of forwards, the difference is that futures are traded on an exchange, but forwards are darker, one-time and private transactions outside the exchange.

Index futures were traded by Nick Lisson () , and forwards are traded, for example, by importers, for example by concluding these contracts to buy currency in X days in order to protect themselves from the risk of price jumps.

At the same time, you cannot really speculate on forwards, since they are not on the exchange, but futures can be sold at any time.

Some people, I had an acquaintance, traded futures for a long time and did not even understand that they were trading them and what it was. Like a person buys and sells oil futures without even understanding that in fact such a future involves the delivery of crude oil to him, although in fact it has been under such contracts for a long time almost they don't deliver anything. Such instruments inflate markets, including the oil price market, introducing a wild speculative part into it, when real production, extraction and consumption cease to play any role in pricing, and everything stupidly depends on the behavior of investors, and not on fundamental factors.

An example of what a futures is (futures contract) you can give this one.

Consider a classic oil futures contract:

A friend of mine was selling this without even realizing that they could naturally bring him oil. I’m kidding, of course, because if you trade this through Russia, then most likely everything is done through an intermediary, and maybe many, but the essence of the futures is exactly this: by buying one such contract, for example for $68 now, you will receive 1 barrel of crude oil The pendos will be brought by helicopter and poured into your window.

You can read how exactly the goods are delivered at the time the futures are executed if you know English, but personally this point has been interesting to me for a long time, and it was very difficult to find information on it, even in English.

And it shows that the trading volume on the market is 1.2 million contracts, not that much in fact, this is a day trade of 81 million dollars, although on some days it is twice as much. You see there in the picture CLM18 - this is the futures of 2018, that year CLM17 was traded and so on. It was a different paper and last year’s trading has already passed, and our futures closes in June 18th year.

Now the futures is trading at $68, and the real current price is slightly different, this is called spot price, but it is difficult to find as many popular sites do not even track it, and often do not mention that they show you the futures price, not the current one.

Here are all futures prices

Russian oil is Urals, the difference in its price with others is not significant, but it exists. Russian oil is not of the highest quality, but not the worst either.

So, you can buy all these futures, through a broker and using, for example, MetaTrader you get access to all the instruments.

It is clear that real oil will not be delivered to you, but there is a redemption mechanism at the end of the contract, plus, many people play in the futures market very speculatively and buy/sell a million times a day.

Each futures contract has a specification. This is a document that contains the main terms of the contract:

• Name of the contract;
• Contract type (calculated or delivered);
• Price (size) contract - the amount of the underlying asset;
• Maturity period - the period during which the contract can be resold or bought back;
• Delivery or settlement date - the day on which the parties to the contract must fulfill their obligations;
• Minimum price change (step);
• Minimum step cost.

You can find all this, for example, on the website investing.com, it looks like this:

Below you see all the parameters of this contract

Now we are at the end of April 2018, the 26th. The contract will be executed in two months, but the price is constantly changing. At this second, enter into a contract, having purchased it, you have a fixed delivery at this price in 2 months. If something goes wrong, you can sell this futures at a different current price before June.

Futures are also used for the so-called (safety net), since they are executed at a fixed price in the future. In this way, you can be guaranteed to get one part of the equation stable, and the other to play more actively, but I will write more about this later in another article.

“Futures are very liquid, volatile and quite risky, so new investors and traders should not deal with them without proper preparation.” -

The same site reports that there are no real deliveries on futures, but in fact there are, it all depends on the type of futures.

If there is no supply, then the variation margin mechanics work.

When a futures contract is executed, if there is no delivery, the current price of the asset is compared to the futures purchase price and the exchange automatically calculates the difference, either paying you a premium or taking your money.

For example, if you buy a futures on an asset for $10 now, which expires in a year, and hold it for a year. Then if the price has become, say, $15, then you will be charged $5, and if the price has dropped to $7, then they will charge you $3.

It is precisely because of such mechanics that exchanges require margin (Deposit margin - collateral) and a margin call may occur - automatic closing of positions. If you have no funds in your account, and your futures have fallen, while execution is still far away, then you have huge problems. You must have funds to cover potential losses at the time the futures close, this is a requirement of the exchange, and this is what led Singapore trader Nick Lisson to collapse. And that is why he constantly begged for money in London, precisely to cover this margin, and then forged documents (I'm talking about the movie "The Con Man" starring Ewan McGregor).

These are the pies. I hope the Econ Dude blog gave adequate examples and explained how futures work; you can find other articles about economics here.

Russian traders are accustomed to using such an instrument as futures in their activities. RTS, MICEX and other exchanges make it possible to do this in relation to a wide range of financial transactions. What are the features of implementing appropriate trading strategies? What are futures and how do they help traders make money?

What are futures

According to the generally accepted definition among traders, futures are financial instruments that allow the execution of futures contracts on an underlying asset, which imply an agreement between the buyer and seller on the price and timing of the transaction. In turn, other aspects of this asset, such as, for example, quantity, color, volume, etc., are specified in separate specifications of the agreement. Futures are a fairly universal financial instrument. They can be adapted to a wide variety of trading areas.

Are futures derivatives?

Yes, this is their variety. The term "derivative" is understood by many traders as a synonym for the phrase "derivative financial instrument", that is, one that is complementary to classic purchase and sale transactions. A derivative and futures are a written agreement that defines the terms of a contract for the seller and the buyer. The specificity of any derivative is that, in essence, it itself can be the subject of a purchase and sale agreement. That is, there may not be a real transfer of goods from the supplier to the buyer.

Futures history

In order to study in sufficient detail the essence of futures, it will be useful to find out how these financial instruments appeared, what are the main historical stages of their introduction into financial circulation. Some traders believe that the mechanism of the relationship between the seller and the buyer, which today fits the definition of futures, appeared long before the instrument in question appeared on the market. As often happens in economics, first a phenomenon appeared, and then a term characterizing it.

The market demanded innovation

One of the main types of goods has always been grain. If we talk about the period until the end of the 19th - beginning of the 20th century, then it was among the key items of world trade. Farmers who grew the grains shipped them to buyers by land or sea. In the autumn there was often an oversupply of goods on the grain market - farmers sought to sell their crops as quickly as possible. In turn, in the spring there could be a shortage of grain, which simply did not have time to grow, while what was not sold had time to spoil in the fall, since there was often nowhere to store it. The market somehow needed to resolve this imbalance. This is how urgent financial instruments appeared that allowed grain farmers, as well as suppliers of any other agricultural goods, to enter into contracts with buyers even before the grains had time to ripen or arrive at the point of sale.

Universal tool

Those agreements began to be called forward agreements (from the English forward - “forward”). Futures are, one might say, an adaptation of a forward contract to the peculiarities of trading on the stock exchange. Experts associate their appearance with established transaction standards in business, thanks to which appropriate agreements can be concluded regardless of the type of product being sold. As a result, futures trading has spread to transactions in which not only grain and other agricultural products are sold and purchased, but also raw materials, metals, some finished food products: sugar, coffee, etc. To a relatively new, if we talk about the history of commodity relations, financial exchanges have also adapted to the instrument.

From raw materials to stock indices

There is information that the first trading of futures in trading was carried out on the Dow Jones exchange for transactions on the index of the same name. As a result, financiers received an excellent tool - just as grain suppliers could do in the autumn. Over time, index futures became so widespread that trading volumes on them sometimes began to exceed those of classic transactions.

Futures on the foreign exchange market

The new financial instrument also began to penetrate the foreign exchange markets. One of the factors that made traders interested in using futures was, according to some experts, the abolition of the “gold standard” in the United States in 1971. Immediately after the entry into force of the new norms, quotes on the world currency market began to undergo strong fluctuations. Traders suggested that futures are the very tool that will help the market get through the phase of high volatility.

Appropriate trading mechanisms were introduced, and due to their rapid growth in popularity, experts assumed that this was exactly what the market demanded. Futures for the dollar and ruble, as noted in a number of sources, were first concluded in April 1998. On the first day of trading, the total amount of contracts exceeded 200 million rubles.

Futures in Russia

By the way, the history of Russian stock trading dates back to the times of Peter the Great. And at the beginning of the 20th century, according to some sources, 87 commodity exchanges functioned in Russia. From the late 20s until 1991, this trade institution did not function in our country. But after Russia’s transition to a free market, it became one of the key ones for the country’s economy.

When did the first futures transactions begin in Russia? There is information that the first precedents for the use of this financial instrument were recorded in 1996 on the St. Petersburg Stock Exchange. The first analytical articles began to appear, putting forward theses about the prospects of using futures in Russian trading. In the 1990s, contracts on government and municipal bonds began to be executed through this financial instrument.

Now futures are used on both major ones (RTS and MICEX). The first one even has a specialized segment for trading using this financial instrument - FORTS. Futures and options (another popular way to enter into contracts) are available on FORTS. It will be useful, by the way, to consider their differences.

How do futures differ from options?

The key criterion for distinguishing futures from options is that the owner of the former must fulfill the conditions of the agreement. In turn, the second financial instrument allows the party to the transaction not to fulfill the conditions specified in the contract. For example, do not sell shares if they have fallen in price compared to the price at the time of purchase.

Types of futures. Staged

However, let's continue our study of futures. Modern traders classify them into two types. Firstly, there are so-called staged futures. They represent a contract, at the time of execution of which the buyer undertakes to purchase, and the seller - to cede, the quantity of some asset specified in the specifications of the transaction. In this case, the futures price will be the one fixed at the most recent trading. If the contract expires and the seller does not relinquish the asset, he may face penalties.

Calculated

There are also settlement futures. Their peculiarity is that the seller and buyer pay each other in those amounts that make up the difference between the price of the asset at the time of signing and execution of the agreement, regardless of its actual delivery.

Futures Specification Structure

One of the key elements of futures transactions is the specification. It is a source that sets out the basic terms of the contract. The structure of the specifications for transactions of the type under consideration is usually as follows: the name of the agreement, its specific type - settlement or staged, the value of the underlying asset, timing, as well as some speculative parameters are indicated. Among the key ones is a tick, or the minimum step of a price change.

Its values ​​depend on the specific asset. For wheat, if we talk about the main world exchanges, it is about 5 cents per ton. Knowing the volume of a futures contract, a trader can easily calculate the total price change for the entire amount of the asset. For example, if an agreement is concluded for 200 tons of wheat, then it can be calculated that the minimum price adjustment will be $10.

Oil futures

How is trading, say, futures for Brent and other types of oil carried out? Very simple. On modern commodity exchanges, this type of oil is traded, as well as two more - Light Sweet and WTI. All of them are called marker oils, since other types of oil are valued based on their correlation with the cost of the ones being traded. Contracts are executed on two main exchanges - NYMEX, in New York, and ICE, in London. The American market sells Light Sweet oil, and the English market sells two other grades. The peculiarities of black gold trading are that they are 24/7.

The generally accepted benchmark for traders on the planet is the Brent grade. This oil is a marker oil for a significant part of the world's black gold grades, including Russian Urals oil. True, as some analysts note, there are activists among traders who do not consider it advisable to hold Brent as a standard. The main reason is that it is mainly mined only in the North Sea, in Norwegian fields. Their reserves are decreasing, as a result of which, as some analysts believe, the liquidity of the product is decreasing, and the price of oil may not reflect real market trends.

Brent futures can be easily recognized by the abbreviation BRN of the London ICE exchange. The full name of the contract is Brent Crude Oil. Oil is supplied under monthly contracts. Accordingly, transactions can be concluded at intervals of a month. The maximum contract duration is 8 years. There are short-term oil futures, and there are long-term ones. The value of the corresponding contract is 1 thousand barrels. The value of 1 tick is a cent, that is, the minimum change in the contract price is $10.

How to win in oil trading using futures? Oil prices, according to some economists, depend on the state of affairs in the global economy. If a person is well versed in this topic, then he can try to enter into a contract to buy or sell oil at a set price, thus opening a long or short position, respectively. Let’s say that at an oil price of $80 per barrel, a person assumes that in 3 months the price of raw materials will rise to $120. He enters into 1 minimum contract to buy black gold at a price of $90 per barrel. Comes 3 months. Oil, as expected, rises in price to $120 per barrel, but the trader ends up with it at a price of $90. According to the terms of the exchange, he is immediately credited with the required difference of $40.

Futures and currencies

Obviously, in order to trade oil futures, a trader will need a significant investment of money. The minimum contract size, as we have already noted, is 1 thousand barrels, that is, if we take the current, not the highest prices for black gold, an investment of approximately 50 thousand dollars will be required. However, a trader has the opportunity to earn money by concluding dollar futures on the MICEX, for example. According to the terms of the exchange, the minimum contract volume is 1 thousand dollars. Tick ​​- 10 kopecks.

For example, a person assumes that the US dollar will decrease from the current 65 rubles to 40. He opens a long position to sell one contract at a price of, say, 50 dollars, for a period of 1 month. A month later, the ruble is really strengthening its position - up to 40 units per US dollar. A person has the right to sell the amount specified in the contract specification at an exchange rate of $50 and earn 10 rubles from each unit of American currency. But if he doesn’t get the exchange rate right, he will have to fulfill his obligations to the exchange one way or another. This usually happens by placing a deposit of the required size on your trading platform account.

Similar earning mechanisms are possible when trading shares of enterprises. With a balanced, qualified analysis of the state of affairs on the market, a trader can count on excellent earnings through futures. Trading on modern exchanges is quite comfortable, transparent and protected by Russian legislation. As a rule, a trader has convenient analytical tools at his disposal, for example, a futures chart for the selected asset. The use of the corresponding one among Russian financiers has gained quite stable popularity.

We recently looked at the topic. As you know, an option is a contract that gives its buyer the right to transact with an asset within a specified period at a set price. The difference between futures contracts and options is that the transaction is mandatory for the buyer of the futures in the same way as for the seller. In this article, I will cover the basic concepts of futures trading.

Basic concepts of futures contracts and examples

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A futures contract (or simply futures) is a contract under which the buyer agrees to buy and the seller agrees to sell an asset by a certain date at a price specified in the contract. These contracts are classified as exchange-traded instruments because they are traded exclusively on exchanges under standardized specifications and trading rules. The counterparties stipulate only the price and execution date. All futures can be divided into 2 categories

• Supply;
• Calculated.

Deliverable futures involve delivery of an asset on the contract execution date. Such an asset can be a commodity (oil, grain) or financial instruments (currency, shares). Settlement futures do not provide for the delivery of an asset and the parties make only cash settlements: the difference between the contract price and the actual price of the instrument on the settlement date. A more detailed classification of futures is based on the nature of the assets: commodities or financial instruments:

Initially, futures arose as delivery commodity contracts, primarily for agricultural products: in this way, suppliers and buyers sought to protect themselves from risks associated with poor harvests or storage conditions of products. For example, the world's largest Chicago Mercantile Exchange (CME) was created in 1848 specifically for trading agricultural contracts. Financial futures appeared only in 1972. Even later (in 1981), the most popular futures for the S&P500 stock index appeared today. According to statistics, only 2-5% of futures contracts end in delivery of the asset. Tasks such as hedging transactions and speculation come to the fore.

Each futures has a specification that may include:

• name of the contract;
• type (settlement or delivery) of the contract;
• contract price;
• price step in points;
• circulation period;
• contract size;
• unit of trade;
• delivery month;
• date of delivery;
• trading hours;
• delivery method;
• restrictions (for example, on fluctuations in the contract currency).

During the time before the futures contract is executed, the spot price of an asset can be either higher or lower than the contract price, depending on this, futures states are distinguished, called contango And backwardation.

• Contango– a situation in which an asset is traded at a lower price than the futures price, i.e. Transaction participants expect an increase in the price of the asset.
• Backwardation– the asset is traded at a higher price than the futures price, i.e. Transaction participants expect a price reduction.

The difference between the futures price and the spot price of an asset is called basis futures contract. For example, in the case of contango the basis is positive. On the day of delivery, the futures and spot prices converge to within the cost of delivery, this is called convergence. The reason for convergence is that the asset storage factor ceases to play a role.

In the event that there is a consistent decline in the basis of the futures contract, the dealer can play on this. For example, buying grain in November and simultaneously selling futures for delivery in March. When the delivery date arrives, the dealer sells the grain at the current spot price and at the same time makes the so-called offset transaction at the same price, buying futures. Thus, hedging price risk through futures allows you to recoup the costs of storing goods. Just like other exchange instruments, futures allow you to apply traditional methods of technical analysis. The concepts of trend, support and resistance lines are valid for them.

Margin and financial result of a futures contract

When opening a transaction with a futures contract, insurance coverage, called deposit margin, is blocked on the account of each of its participants. It usually ranges from 2 to 30% of the contract value. After the transaction is completed, the deposit margin is returned to its participants. Sometimes situations arise in which the exchange may require additional margin. This situation is called.

Typically this is due to . If a transaction participant is unable to deposit additional margin, he is forced to close the position. In the event of a massive closing of positions, the price of the asset receives an additional impulse to change. For example, when long positions are closed en masse, the price of an asset may fall sharply. On the FORTS market, the guarantee for delivery futures 5 days before execution increases by 1.5 times. If one of the parties refuses to fulfill the terms of the contract, the blocked amount of the guarantee security is withdrawn as a penalty and transferred to the other party as compensation. Control over the fulfillment of financial obligations by the parties to the transaction is carried out by the clearing house.

In addition, every day at the close of the trading day, a variation margin is accrued to the open futures position. On the first day, it is equal to the difference between the price at which the contract was concluded and the closing price of the day (clearing) for this instrument. On the contract execution day, the variation margin is equal to the difference between the current price and the last clearing price. Thus, the result of a transaction for a specific participant is equal to the amount of variation margin accrued for all days while the position under the contract is open.

The financial result of the transaction is equal to VM1+VM2+VM3=600-400+200=400 rubles.

If the futures are settled and are purchased for speculative purposes, as well as in a number of other situations, it is preferable not to wait for the day of its execution. In this case, the opposite transaction is concluded, called offset. For example, if 10 futures contracts were previously purchased, then exactly the same number must be sold. After this, the obligations under the contract are transferred to its new buyer. On the New York Mercantile Exchange NYMEX (organizationally part of the CME), no more than 1% of open positions in WTI reach delivery. An important difference between a settlement futures and a deliverable one is that when a settlement futures position is open, the guarantee margin does not increase on the eve of execution. The final price on the execution day is based on the spot price. For example, in the case of gold futures, the London fixing on the COMEX (Commodity Exchange) is taken.

Futures and contracts for difference: similarities and differences

The arithmetic of calculating profit when trading settled futures is reminiscent of a popular class of derivative instruments called CFD (Contract for Difference, contract for difference). By trading CFDs, a trader makes money on the difference between the prices of an asset when closing and opening a trading position. The asset can be shares, stock indices, exchange commodities at spot prices, futures themselves, etc. The main similarities and differences between futures and CFDs can be presented in table form:

Tool	CFD	Futures
Traded on the stock exchange	No	Yes
Has a due date	—	Yes
Traded in fractional lots	Yes	No
Possible delivery of asset	No	Yes
Restrictions on short positions	No	Yes

Unlike futures, CFDs are traded with Forex brokers along with currency pairs, but not around the clock, but during trading hours on the relevant exchanges that deal with specific underlying assets. One of the most liquid futures contracts traded in the Russian FORTS system is RTS index futures. It is listed as a CFD on the streaming quote chart investing.com/indices/rts-cash-settled-futures.

However, it is important not to confuse an exchange-traded instrument with an over-the-counter instrument. The fundamental difference between them is that the price of an exchange-traded instrument is determined by the balance of supply and demand during trading, while dealing centers only allow you to place bets on the rise or fall of the price, but not to influence it. Among the most liquid futures contracts, we should mention, first of all, futures for stock indices and oil. On American exchanges, futures for the Dow Jones and S&P500 indices are traded on the Chicago Mercantile Exchange, and oil futures are traded on the New York Mercantile Exchange NYMEX.

The most popular futures on the Moscow Exchange are for the RTS index (30% of the total futures trading turnover) and for the US dollar - ruble pair (60% of the turnover). According to the specification, the contract price for the RTS index is equal to the index value multiplied by 100, and the cost of the minimum price step (10 points) is equal to $0.2. Thus, today the contract is trading above 100 thousand rubles. This is one of the reasons why non-professional traders choose more affordable CFDs.

For example, the minimum lot for CFD RUS50 (RTS index symbol) is 0.01, and the price of 1 point is $10, so with a maximum leverage of 1:25, a trader can trade the index with $500 in his account. In total, CFDs are available to the company's clients on 26 index and 11 commodity futures. For comparison, the largest one in Russia offers CFD trading on only 10 index and 3 commodity futures.

There are exchange goods for which the concept of market price has no direct economic justification. First of all, it is oil. The first futures transactions in the oil market were made in the early 1980s. But in 1986, the Mexican oil company PEMEX was the first to link spot prices to futures prices, which quickly became the standard.

With global oil production of all grades less than 100 million barrels per day, on the London ICE Futures Europe platform an average of about a million futures contracts for Brent oil are concluded per day. According to the specification, the volume of one contract is 1000 barrels. Thus, the total volume of oil futures traded on this one platform is approximately 10 times higher than global oil production. Small (about 1 million barrels or less) changes in WTI oil reserves in the United States are not able to affect supply, but lead to futures trading. On November 29, 2016, trading in Urals oil futures was launched on the St. Petersburg International Mercantile Exchange (SPIMEX).

Futures for Urals are deliverable, focused primarily on exports, but Russian companies are also allowed to trade. The volume of the delivery batch is 720,000 barrels. According to the plan of the Russian Ministry of Energy, these auctions are designed to reduce the discount of the Urals brand relative to Brent, which averages $2, but sometimes increases to $5 or more. The target level for trading volume at the end of 2017 is set at 200 thousand contracts per month, while at the moment no more than several dozen contracts are concluded per day.

In this article, I did not try to cover all aspects of futures trading on the exchange. Specific typical situations and methods of trading them are a separate big topic that is unlikely to be of interest to novice investors. However, if there is reciprocal interest from readers, I can consider the topic in more detail.

Profit to everyone!