Futures is a concept relative to spot goods. Strictly speaking, futures are not commodities, but a standardized commodity contract. The contract stipulates that both parties will trade on a specific commodity or commodity on a certain day in the future. Financial assets are traded according to the contract content. The editor below will introduce to you the relevant knowledge about getting started with futures.

Introduction to futures knowledge (1) Futures trading: refers to a transaction in which the buyer and seller do not deliver immediately after the transaction is completed, but perform delivery procedures according to the transaction price and quantity specified in the contract and after the agreed delivery period.

Futures Contract: A futures contract is a forward contract or agreement to deliver a certain quantity and quality grade of a commodity at a certain time in the future. Achieved on the trading floor of an approved exchange and is legally binding. Compared with spot forward contracts, they have a standardized format; they are easy to resell; the proportion of physical delivery is small; and the performance rate is very high. Futures exchanges stipulate standardized quantity, quality, delivery location, and delivery time for futures contracts. As for futures prices, they change with changes in market conditions.

Close a position: buy and then sell, or sell and then buy to settle the new order originally made.

Order number: The unique identifier assigned by the system to the order or transaction order.

Pledge: refers to the member’s application and approval by the exchange to transfer the certificate of rights held by the exchange to the exchange as a guarantee for the performance of the transaction margin debt. The pledge of rights certificates is limited to transaction margin, but losses, expenses, taxes and other amounts must be settled in monetary funds.

Position limit system: It is a system in which futures exchanges limit the number of positions held by members and customers in order to prevent excessive concentration of market risks on a small number of traders and prevent market manipulation.

Large trader reporting system: It is another system closely related to the position limit system to control transaction risks and prevent large trader manipulation of the market.

Daily mark-to-market system: refers to the settlement department calculating and checking the margin account balance after the market closes every day, and issuing margin call notices in a timely manner to maintain the margin balance above a certain level and prevent the occurrence of liabilities. settlement system.

Hedging transactions: Hedging refers to buying (or selling) futures contracts of the same commodity in the futures market in the opposite direction to the spot market and with equal quantities, regardless of the spot supply market price. No matter how you fluctuate, you can eventually achieve the result of losing money in one market while making profits in another market, and the amount of loss and the amount of profit are roughly equal, thus achieving the purpose of avoiding risks.

Long hedging: Long hedging refers to a way for traders to first buy futures in the futures market so that they will not cause financial losses to themselves due to rising prices when buying in the spot market in the future. Futures trading methods.

Short Hedging: Selling futures contracts to protect against future losses due to falling prices when selling physical commodities. When selling spot commodities, the previously sold futures contract is offset by buying another futures contract with the same quantity, category and delivery month to end the hedging. Also known as selling period hedging.

Hedger: An individual or company that owns or plans to own cash commodities such as corn, soybeans, wheat, government bonds, etc., and is concerned about adverse price changes before actually buying or selling these commodities in the spot market. The hedger buys (sells) a futures contract that is identical to the spot commodity in the futures market, and then sells (buys) another identical futures contract at a certain time in the future to offset the short contract he holds. Losses caused by price changes in spot market transactions.

Treasury bond repurchase business: Treasury bond repurchase business means that the buyer and seller agree to conduct a reverse transaction at a certain price and the same quantity at a certain time in the future while completing a certain spot transaction of treasury bonds ( That is, the original buyer becomes the seller, and the original seller becomes the buyer). The development of this business is conducive to bond holders and investors to adjust their investment portfolios, and the holding period yield of government bonds is also fully reflected.

Treasury bond futures trading: Treasury bond futures trading refers to a contract transaction between buyers and sellers of treasury bonds through public bidding in a trading venue to deliver a standard quantity of specific treasury bonds at a transaction price in a certain period in the future. Due to the growing trend of speculation and chaos in the trading order of treasury bond futures, the China Securities Regulatory Commission decided to suspend the pilot trading of treasury bond futures on May 17, 1995.

Settlement: refers to the business activities that calculate and allocate members’ trading margins, profits and losses, handling fees, delivery payments and other related funds based on transaction results and relevant regulations of the exchange.

Clearing Member: A clearinghouse member of an exchange. This type of membership is usually owned by a company or business. Clearing members are responsible for the financial affordability of customers who clear transactions through their affiliated companies.

Forward contract: It is a contract signed by the buyer and seller based on the special needs of the buyer and seller.

Swap contract: It is a contract signed by two parties to exchange certain assets with each other in a certain period in the future. To be more precise, he said that a swap contract is a contract signed between parties to exchange cash flows that they believe have equal economic value within a certain period in the future. The more common ones are interest rate swap contracts and currency swap contracts.

Futures market: It is a place for futures trading and is the sum of various futures trading relationships.

It is a highly organized and highly standardized market form developed on the basis of the spot market in accordance with the principles of "openness, fairness and justice". It is not only an extension of the spot market, but also another advanced development stage of the market. From the perspective of organizational structure, the futures market in a broad sense includes futures exchanges, clearing houses or clearing companies, brokerage companies and futures traders; the futures market in a narrow sense only refers to futures exchanges.

Futures exchange: It is a place for buying and selling futures contracts and is the core of the futures market. It is a non-profit institution, but its non-profit status only means that the exchange itself does not conduct trading activities. Not aiming to make profits does not mean that it does not pay attention to profit accounting. In this sense, the exchange is also a financially independent for-profit organization that achieves reasonable economic interests on the basis of providing traders with an open, fair and just trading place and effective supervision services, including membership fee income and transaction fees. revenue, information service revenue and other revenue. The set of institutional rules it formulates provides a self-management mechanism for the entire futures market, enabling the principles of "openness, fairness, and impartiality" in futures trading to be realized.

Introduction to futures knowledge (2) Futures brokers: refer to intermediary organizations established in accordance with the law to conduct futures transactions on behalf of customers in their own names and charge certain handling fees. They are generally called futures brokerage companies.

On-exchange trading: also known as exchange trading, refers to a trading method in which all supply and demand parties are concentrated on the exchange for bidding transactions. This trading method has the characteristics that the exchange collects deposits from trading participants, and is also responsible for clearing and performance guarantee responsibilities.

Over-the-counter trading: also known as over-the-counter trading, refers to a trading method in which both parties directly become counterparties. This transaction method has many forms, and products with different contents can be designed according to the different needs of each user.

Listed varieties: refers to the subject matter of futures contract transactions, such as corn, copper, oil, etc. represented by the contract. Not all commodities are suitable for futures trading. Among many physical commodities, generally speaking, only commodities with the following attributes can be listed as futures contracts: First, the price fluctuates greatly. Second, supply and demand are large. Third, it is easy to grade and standardize. Fourth, it is easy to store and transport. According to the types of transactions, futures trading can be divided into two major categories: commodity futures and financial futures. Futures that use physical commodities, such as corn, wheat, copper, aluminum, etc., as futures types are commodity futures. Futures that use financial products, such as exchange rates, interest rates, stock indexes, etc., are financial futures. Financial futures generally do not have quality problems, and most delivery uses cash delivery with spread settlement. The main varieties listed in my country include copper, aluminum, soybeans, wheat and natural rubber.

Commodity futures: Commodity futures are futures contracts whose indicators are physical commodities. Commodity futures have a long history and are of various types, mainly including agricultural and sideline products, metal products, energy products, etc. Specifically, there are about 20 kinds of agricultural and sideline products, including corn, soybeans, wheat, rice, oats, barley, rye, pork belly, live pigs, live cattle, calves, soybean meal, soybean oil, cocoa, coffee, cotton, Wool, sugar, orange juice, rapeseed oil, etc. Among them, soybeans, corn, and wheat are known as the three major agricultural product futures: 9 types of metal products, including gold, silver, copper, aluminum, lead, zinc, nickel, rake, and platinum; chemical industry There are 5 types of products, including crude oil, heating oil, unleaded regular gasoline, propane, and natural rubber; 2 types of forestry products, including wood and plywood.

Commodity futures trading: Commodity futures trading is the purchase and sale of "standardized contracts" (i.e. "futures contracts") representing specific commodities.

Financial futures: refers to futures contracts with financial instruments as the subject matter. As a type of futures trading, financial futures have the general characteristics of futures trading, but compared with commodity futures, the subject matter of the contract is not physical commodities, but traditional financial commodities, such as securities, currencies, exchange rates, interest rates, etc.

Interest rate futures: refers to futures contracts with bond securities as the subject matter, which can avoid the risk of security price changes caused by fluctuations in bank interest rates.

Currency futures: Also known as foreign exchange futures, they are futures contracts with exchange rates as the subject matter, used to avoid exchange rate risks.

Stock index futures: It is a financial futures contract with a stock price index as the subject matter.

Options: Also known as options, options trading is actually the purchase and sale of rights. This right means that investors can buy or sell a certain amount of a certain "commodity" to the seller of the option at a predetermined price (called the agreed price) at any time within a certain period, regardless of whether during this period. How the price of this "commodity" changes. The options contract stipulates the term, agreed price, transaction quantity, type, etc. During the validity period, the buyer can freely choose to exercise the right to resell; if it is deemed unfavorable, he can waive this right; beyond the specified period, the contract will become invalid and the buyer's option will automatically become invalid. Options are divided into call options and put options.

Call option: refers to the right to buy a certain amount of the underlying object at the execution price during the validity period of the option contract.

Put option: refers to the right to sell the underlying asset at the execution price during the validity period of the option contract.

Option buyer: A call or put option buyer. The option buyer has the right, but not the obligation, to assume a certain futures position. Also called option holder.

Option seller: A person who earns premiums by selling option contracts and has performance obligations when the option holder requests to exercise his rights. Also called a seller.

European options: refer to options that are only allowed to be executed on the expiration date of the contract. They are used in most over-the-counter transactions.

American options: refer to options that can be executed on any day within the validity period after the transaction, and are mostly used on exchanges.

Real-money options: Options with intrinsic value. A call option has intrinsic value when its strike price is lower than the then-current market price of the underlying futures contract. A put option has intrinsic value when its strike price is higher than the then-current market price of the underlying futures contract.

Out-of-the-money options: options without intrinsic value, that is, call options with a strike price higher than the current futures price or put options with a strike price lower than the current futures price.

Interest rate swap transaction: It is an exchange transaction between different types of interest rates of the same currency fund, which is generally not accompanied by the exchange of principal.

Currency swap transaction: refers to the exchange transaction between two currencies. Under normal circumstances, it refers to the principal exchange of funds in two currencies.

Foreign exchange margin trading: refers to a forward foreign exchange trading method between financial institutions and between financial institutions and investors. When trading, traders only pay 1% to 10% of the deposit (margin) to conduct 100% of the transaction amount.

Adjusted futures price: A futures price that is equivalent to the spot price. Calculation method: Multiply the futures price by the conversion coefficient (factor) of a specific financial security (such as a Treasury bill) used for delivery.

Order: A market entry represents a commodity purchase and sale order entered through a computer terminal.

Contract note: a purchase and sale contract note generated by computer matching.

Yesterday’s closing price: refers to the last transaction price of the previous trading day.

Opening price: the first transaction price of a commodity on the day.

Closing price: the last transaction price of a commodity on the day.

Highest price: the highest transaction price of a commodity on the day.

Lowest price: the lowest transaction price of a commodity on the day.

Latest price: the latest transaction price of a commodity on that day.

Transaction price: refers to the latest transaction price of a certain futures contract.

Settlement price: the weighted average price of all traded contracts of a commodity on that day.

Resistance point: a certain price level that is difficult for the price to exceed.

Support point: Due to the purchase of the contract, it is difficult for the price to fall below a certain price level.

Trading volume: refers to the number of commodity futures contracts bought or sold within a certain period of time, usually the number of contracts traded in a trading day.

Open interest: A certain commodity futures or option contract that has not been hedged by an opposite futures or option contract, nor has physical delivery or fulfillment of the option contract occurred.

Total quantity: also called open interest.

Settlement price: the weighted transaction price.

Weighted volume: The parameters involved when the exchange calculates the settlement price.

Bid price: the current highest declared buying price of a commodity.

Selling price: the current lowest reported selling price of a commodity.

Spread: The price difference between two related markets or commodities.

Volatility: A calculation used to measure price changes over a certain period of time. Usually expressed in percentage points and calculated as the annual standard deviation of daily price changes in percentage points.

Raise or fall: the price difference between the closing price of a commodity on that day and yesterday’s settlement price.

Limit limit: The maximum price fluctuation range (range) specified by the exchange for each contract on a daily basis.

High limit: the maximum price that can be entered for a commodity on that day (equal to yesterday’s settlement price + maximum change range).

Lower limit: the lowest price that can be entered for a commodity on that day (equal to yesterday’s settlement price? the maximum change).

Short volume: The total number of futures or options contracts of a certain commodity that have not been hedged by opposite futures or options contracts, nor have physical delivery or fulfillment of option contracts occurred.

Trading volume: The number of commodity futures contracts bought or sold within a certain period of time. Trading volume usually refers to the number of contracts traded on each trading day.

Opening a position: There are usually two operating methods in futures trading, one is to go long (buyer) when the market is bullish, and the other is to go short (seller) when the market is bearish. Whether it is long or short, placing an order is called "opening a position".

Margin: Sometimes also called deposit. In margin trading, buyers and sellers only need to pay a small deposit to the broker. There are two purposes of paying a deposit: (1) To protect the interests of the brokerage firm. When the customer is unable to pay for any reason, the brokerage firm will compensate with the deposit. (2) To control speculative activities on the exchange. Under normal circumstances, the margin is about 10% of the total value of the contract traded. Judging from the essence of margin, it is a sum of funds paid by traders to the commodity clearing house through a broker, without any interest, to ensure that traders are able to pay commissions and possible losses. But trading margin is by no means a deposit for buying and selling futures.

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