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A future contract is an option/contract to buy or sell. An option on
a future is an option on an option.
Theoretically the price of a future contract is the current cash price,
plus any storage cost (for hard futures) through to expiration, plus any
interest charges that would be incurred if you had to borrow money to
purchase the futures contract through to expiration. Some folks trade
solely on the disparity between this theory and the price difference in the
markets - a future to current price arbitrage.
You can buy a June, September or December contract based on your
predictions. For hard commodities if you carry the contract through to the
expiration date you take delivery of the goods (box car full of wheat on a wheat
contract, for example). That isn't as bad as it sounds - they don't
deliver it to your front door. For financial futures you get your account
credited or debited the difference in the value of the contract at the time of
expiration vs. what you paid for it. In financials it's really
'legal' Las Vegas time, in hard goods it's delivery time.
Jay
<BLOCKQUOTE
>
----- Original Message -----
From: <A title=mailto:uhehs@xxxxxxxx
href="">uhehs@xxxxxxxx
To: <A
title=mailto:Equismetastock@xxxxxxxxxxxxxxx
href="">Equismetastock@xxxxxxxxxxxxxx
; <A title=mailto:Metastockusers@xxxxxxxxxxxxxxx
href="">Metastockusers@xxxxxxxxxxxxxx
; <A title=mailto:Sunday_Traders@xxxxxxxxxxxxxxx
href="">Sunday_Traders@xxxxxxxxxxxxxx
Sent: Thursday, March 18, 2004 10:09
AM
Subject: [Metastockusers] Futures /
Options comparison
<SPAN
>As a rookie on
the Futures scene:
<SPAN
>
<SPAN
>Do futures have
a diminishing time value component like stock options do?
<SPAN
>Am I able to
buy and series I want? EX: Can I buy out to June, September or December
based on my predictions?
<SPAN
>
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