Payment and Deliverable Futures
Current futures (Non-Deliverable futures) is used when the parties are made only cash payments, while the physical delivery of the underlying asset is not performed. Thus, after the expiration of said period the seller does not deliver the goods. Exchange produces mutual settlement between the parties. Current futures are used to purchase the underlying asset such as a stock index or currency.
Delivery futures used to purchase a specified quantity of the underlying asset (oil, securities, currencies) at a specified date (the date of the contract). Suppose an investor enters into a futures contract for crude oil. At the specified time the futures seller must deliver him to the asset at the price specified in the futures contract and the investor is obliged to buy this product. If, at the time of purchase, the price of oil rose, the investor (buyer) buys it at a lower cost and, therefore, is a winner. However, the oil price may fall, and when the time comes to pay for delivery, the purchaser will pay the price, inherent in the contract, which will be higher than the market. Thus, the investor suffers a loss. In the possibility of such a situation, and concluded the risk of futures.
The buyer of the goods, has entered into a futures contract can make a profit by selling futures, with the proviso that the market price of the goods described therein at the time of settlement of futures is lower than that for which he is obliged to buy the product.
For the first time futures started trading on the Chicago exchange in the second half of last century and since then they are traded on a par with the usual investment instruments such as stocks, etc. Along with the futures, stock options also play a significant role in the stock market, as their use, despite a certain complexity, gives a fairly high potential for trade.
I must say that the Stock Exchange closely monitors all operations with the futures and options. It monitors the calculations for them and appropriate delivery of underlying assets.
