Financial Futures

Financial Futures

Financial futures are efficient risk management instruments that are used for hedging or speculation. Owners of large share portfolios, such as brokers, investment fund managers, pension funds and other institutions trade financial futures to hedge against price risk. Currency, stock index and interest rate are the most common financial futures traded in the market.

Benefits of trading Financial Futures

  • High liquidity
  • Avoid actual transfer of financial instruments
  • Reduced transaction cost compared to trading the underlying currency, stock index or interest rate products

TYPES OF FINANCIALS

Currency Futures

Currency futures are futures contracts to exchange one currency for another at a specific date in the future at a price (exchange rate) that is fixed on the purchase date. Currency futures allow investors to hedge against foreign exchange risk. Some of the popular currency futures contracts that we offer are Euro, Yen, British Pound and the Swiss Franc.

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Stock Index Futures

A stock index is a performance benchmark of a stock market, and each index consists of a different multiple to determine the price of the futures contracts. Index futures replicate the performance of an underlying stock market index.

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Interest Rate Futures

Trading in interest rate futures enables investors to hedge interest rate risks and in turn reduces the overall cost of borrowing and financing. Interest rate futures allow the buyer and seller to lock in the price of the interest-bearing asset for a future date. Interest rate futures contracts include Treasury-bill futures, Treasury-bond futures and Eurodollar futures.

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Options

Option buyers pay a premium upfront for the right to buy or sell an underlying futures contract at a specified strike price on or before a predetermined future date. The buyer is not obligated to buy or sell the contract if it is not profitable. Compared to futures trading, trading in options is relatively less risky.

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What Financial Futures Contracts are available for trading?

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