There are two types of futures traders: #-----------------------------------
Futures traders are traditionally placed in one of two groups: hedgers, who have an interest in the underlying commodity and are seeking to hedge out the risk of price changes; and speculators, who seek to make a profit by predicting market moves and buying a commodity "on paper" for which they have no practical use. #---------------------------------- There are two types of futures settlements: #--------------------------------- Settlement is the act of consummating the contract, and can be done in one of two ways, as specified per type of futures contract: Physical Delivery - the amount specified of the underlying asset of the contract is delivered by the seller of the contract to the exchange, and by the exchange to the buyers of the contract. Physical delivery is common with commodities and bonds. In practice, it occurs only on a minority of contracts. Most are cancelled out by purchasing a covering position - that is, buying a contract to cancel out an earlier sale (covering a short), or selling a contract to liquidate an earlier purchase (covering a long). The Nymex crude futures contract uses this method of settlement upon expiration. Cash Settlement - a cash payment is made based on the underlying reference rate, such as a short term interest rate index such as Euribor, or the closing value of a stock market index. A futures contract might also opt to settle against an index based on trade in a related spot market. Ice Brent futures use this method. #------------------------------ http://en.wikipedia.org/wiki/Futures_contract Regards, LelandJ Michael Madigan wrote: > I understand, but from what I understand from the 60 Minutes piece, there > were more contracts than available oil. > > ************************************************* > I'm Surviving The Obama Depression > > http://www.cafepress.com/rightwingmike/6535062 > > > --- On Thu, 3/12/09, Stephen Russell <[email protected]> wrote: > > >> From: Stephen Russell <[email protected]> >> Subject: Re: [OT] Billions to Dubai >> To: "ProFox Email List" <[email protected]> >> Date: Thursday, March 12, 2009, 11:43 PM >> On Thu, Mar 12, 2009 at 6:04 PM, Michael Madigan >> <[email protected]> wrote: >> >>> You shouldn't be able to sell futures on oil that >>> >> can't be taken from the ground. There were more >> contracts than available oil. >> --------------------------------- >> >> ??? These are oil futures. What are you talking about. >> Futures were >> bought and sold to others who did the same bringing up the >> price per >> barrel. >> >> -- >> Stephen Russell >> Sr. Production Systems Programmer >> Web and Windows Development >> Independent Contractor >> Memphis TN >> >> 901.246-0159 >> >> _______________________________________________ >> Post Messages to: [email protected] >> Subscription Maintenance: >> http://leafe.com/mailman/listinfo/profox >> OT-free version of this list: >> http://leafe.com/mailman/listinfo/profoxtech >> Searchable Archive: http://leafe.com/archives/search/profox >> This message: >> http://leafe.com/archives/byMID/profox/[email protected] >> ** All postings, unless explicitly stated otherwise, are >> the opinions of the author, and do not constitute legal or >> medical advice. This statement is added to the messages for >> those lawyers who are too stupid to see the obvious. >> > [excessive quoting removed by server] _______________________________________________ Post Messages to: [email protected] Subscription Maintenance: http://leafe.com/mailman/listinfo/profox OT-free version of this list: http://leafe.com/mailman/listinfo/profoxtech Searchable Archive: http://leafe.com/archives/search/profox This message: http://leafe.com/archives/byMID/profox/[email protected] ** All postings, unless explicitly stated otherwise, are the opinions of the author, and do not constitute legal or medical advice. This statement is added to the messages for those lawyers who are too stupid to see the obvious.
