• The Future

  Filed under News
  Jun 17

  You, as a seller of a contract for the future, has the obligation to sell a particular asset (automotive) in exchange for the payment of an agreed price (10.518 euros), at a date agreed upon (a year). What will happen within a year? Suppose that the price of the car has been located in 11.119 euros. You, as a seller of a contract for the future, has the obligation to sell 100 cars at the agreed price, 10.518 euros to your customer. In this way, you lose by each car sold, while your client saves those 601 euros on each car you buy. In summary, if you think that the price of a particular asset will go up, you must buy future contracts, while if you think that you will drop, you must sell future contracts. Graphic representation of a futures contract following the previous example, suppose that you are the buyer of the contract for the future, i.e., you have the obligation within a period of time, buy the underlying asset at a fixed price.

  To represent this position, we are going to place in the axis of coordinates the various prices of the underlying asset, and in the axis of ordinates will place gains or losses. Figure 2.1. (p. 15). If the price that we have set up the contract for the future is 10.518 euros, when we will have profits? When we incurriremos in losses?.

  It seems obvious to think that we will have profits provided that we have the obligation to buy cheap, that is, provided that the price of cars lie above 10.518 euros. Thus, for each euro above the 10.518 that set the price of the car, you will be saving (gaining) a euro. If the price of the car you stood at 11.119 euros has cattle/saved 601 euros (11.119 10.518). We incurriremos in losses if the reverse process occurs.

  Tagged as: news
  
  Comments Off on The Future

Comments are closed.