The future in English is the future, which evolved from the word "future". It means that both parties to the transaction don't have to deliver the physical object in the early stage of the transaction, but agree to deliver the physical object at some time in the future, so China people call it "futures". Futures is the largest means of trading after foreign exchange.
The so-called futures generally refer to futures contracts, which are standardized contracts formulated by futures exchanges to deliver a certain number of subject matter at a specific time and place in the future. This subject matter, also known as the underlying asset, can be a commodity, such as copper or crude oil, a financial instrument, such as foreign exchange and bonds, or a financial indicator, such as the expected annualized interest rate or stock index of three-month interbank lending. Futures trading is an inevitable product of the development of market economy to a certain stage.
2. What is the function of futures?
Futures have two main functions:
1. Discover the price: There are many participants in futures trading, and they all trade at the price they think is the most suitable. Therefore, futures prices can comprehensively reflect the expectations and price trends of both the supply and demand sides in the future. This kind of price information increases the transparency of the market and helps to improve the efficiency of resource allocation.
2. Avoiding market risks: In the actual production and operation process, in order to avoid rising costs or falling profits caused by changing commodity prices, futures trading can be used for hedging, that is, buying or selling commodities with the same quantity but opposite trading directions in the futures market, so that the gains and losses in the two markets can offset each other.
3. What are the classifications of futures?
Commodity futures and financial futures. Commodity futures are divided into industrial products (which can be subdivided into metal commodities (precious metals and non-precious metals) and energy commodities), agricultural products and other commodities. Financial futures are mainly traditional financial commodities (tools) such as stock index, expected annualized interest rate and exchange rate. All kinds of futures trading include options trading.
Commodity futures
Agricultural products futures: such as soybean, soybean oil, soybean meal, indica rice, wheat, corn, cotton, sugar, coffee, pork breast, rapeseed oil and palm oil.
Metal futures: such as copper, aluminum, tin, lead, zinc, nickel, gold, silver, rebar, wire, etc.
Energy futures: such as crude oil (plastics, PTA, PVC), gasoline (methanol) and fuel oil. Emerging varieties include temperature, carbon dioxide emission quota and natural rubber.
Financial futures
Stock index futures: such as FTSE UK index, DAX German index, Tokyo Nikkei average index, Hang Seng Hong Kong index, Shanghai and Shenzhen 300 index, fluctuation range of% exchange margin contract delivery month, IF stock index of China Financial Futures Exchange 10% 300 yuan 15% current month, other contracts 18%, current month and next month.
Interest rate futures: interest rate futures refer to futures contracts with bond securities as the subject matter, which can avoid the risk of securities price changes caused by expected annualized interest rate fluctuations. Expected annualized interest rate futures can generally be divided into short-term expected annualized interest rate futures and long-term expected annualized interest rate futures. The former is mostly based on the three-month expected annualized interest rate of interbank lending, while the latter is mostly based on long-term bonds with a maturity of more than five years.
Foreign exchange futures
Foreign exchange futures, also known as currency futures, are futures contracts that convert one currency into another at the current exchange rate on the last trading day. Refers to futures contracts with exchange rate as the subject matter, which are used to avoid exchange rate risks. It is the earliest variety in financial futures.
Precious metal futures
Futures contracts dominated by gold and silver.