long position on futures
long position on futures
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user54532 · External communityPost link
External question — Quantitative Finance Stack Exchange
Author: user54532
Original post: https://quant.stackexchange.com/questions/63173
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Now I am opening a long position of 1000000 USD on euro futures at a spot FX rate of $1.2568/€. Technically, this means that I am taking a credit of €795,671.55 (2dp) from my broker and immediately am exchanging that amount to 1000000 USD. Therefore, I now have 1000000 USD available in a virtual space but I owe my broker €795,671.55. Is this correct?
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swordfish81 · External communityPost link
External answer — Quantitative Finance Stack Exchange
Author: swordfish81
Original post: https://quant.stackexchange.com/a/63183
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You dont owe your broker anything. It was a spot deal and you exchanged your USD for the EUR equivalent. When you want to convert it back to your account ccy (USD), you will then convert back the EUR for the USD at whatever the prevailing spot rate is.
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dm63 · External communityPost link
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Author: dm63
Original post: https://quant.stackexchange.com/a/63188
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This is a futures trade ? If so there are no payments of euros or dollars except for the payment (or receipt) of daily variation margin to the exchange via your broker. If this is CME futures those payments will be in USD and will represent the dollar gain or loss on your trade. This will be automatically debited and credited from your account.
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Quoted from Forex.com.bd-Editorial External question — Quantitative Finance Stack Exchange Author: user54532 Source score (net votes, not local likes): 0 Original post: https://quant.stackexchange.com/questions/63173 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Now I am opening a long position of 1000000 USD on euro futures at a spot FX rate of $1.2568/€. Technically, this means that I am taking a credit of €795,671.55 (2dp) from my broker and immediately am exchanging that amount to 1000000 USD. Therefore, I now have 1000000 USD available in a virtual space but I owe my broker €795,671.55. Is this correct?
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