Futures Specific Properties | First notice date | Margin | Execution terminology | Quantra Course
A quant fund manager + A HFT prop desk founder + A quant teacher = a session worth watching
On 9 April, we hosted Kelvin Foo, Dr Gaurav Raizada, and Vivek Krishnamoorthy for a workshop on Algorithmic Trading & Options Risk Management.
Watch the recording:
www.quantinsti.com/articles/algorithmic-trading-python-ai-options-risk-management-webinar/
.
. A quant fund manager + A HFT prop desk founder + A quant teacher = a session worth watching
On 9 April, we hosted Kelvin Foo, Dr Gaurav Raizada, and Vivek Krishnamoorthy for a workshop on Algorithmic Trading & Options Risk Management.
Watch the recording:
www.quantinsti.com/articles/algorithmic-trading-python-ai-options-risk-management-webinar/
.
. Part of the course on Futures Trading: Concepts & Strategies: https://quantra.quantinsti.com/course...
Part 1 here - • Futures Specific Properties | Root Symbol,...
Welcome to the second video on futures specific properties.
In the previous video you learnt about the futures specific properties like root symbol, month, ticker and expiry date. Let’s go over the remaining ones.
First Notice Date
Most commodity futures are deliverable as of the first notice date. Meaning that after this point in time you may be called upon to make or take delivery. As a speculator this is something that you do not want to happen. A truck full of live cows outside your office can ruin anyone’s day. But this is in reality not a risk for regular futures traders. Unless you have signed some special documents with your bank you will not be allowed to keep a position past this date and they will shut you down. Still, you do need to be aware of the first notice date and close your position before this not to risk the bank or broker doing it for you.
Margin
When you open a position in a futures contract long or short you need to have sufficient margin on your account. You don’t pay up the full value of the contract as you would do with stocks for instance but a certain margin is required to ensure that you can make good on your obligations. Always make sure that you have enough money on your account to cover not only the margin but also an adverse move. You need to maintain a certain minimum margin on your account at all times or you risk having your position shut down for you.
Execution Terminology
In the futures world participants tend to use slightly different terminology than with stocks or currencies. In the case of placing trades the reason for this is clarity to avoid misunderstandings. Being long means to hold a net positive number of contracts and thereby speculating on the price moving up. Being short would be the opposite holding a negative amount of contracts and speculating on a decline. So far the terminology is the same as with other asset classes. But when you place a trade with the purpose of going long futures you say that you are “buying to open”. When you later want to close that position you are “selling to close”. The equivalent goes for short positions where you are “selling to open” and “buying to close”.
That’s all for this video.
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