What is the price of commodity at delivery day for a futures contract?
What is the price of commodity at delivery day for a futures contract?
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William · External communityPost link
External question — Personal Finance Stack Exchange
Author: William
Original post: https://money.stackexchange.com/questions/124735
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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If I hold a futures contract till the delivery day, what price should I pay for the commodity delivered to me, the price of the futures contract when I bought it, the price of the last transaction at the last trading day, the average price of the last trading day, or the average price of the futures contract over all trading days?
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D Stanley · External communityPost link
External answer — Personal Finance Stack Exchange
Author: D Stanley
Original post: https://money.stackexchange.com/a/124741
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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A futures contract is a contract to buy a commodity (or stock, or whatever) for a specified price at a specified time. So if you enter into a contract at a certain price, that's the price you'll pay. The market (spot) price is irrelevant (other than to measure opportunity cost or to determine how much it costs you to get out of the contract at the last minute).
Note that technically you don't "buy" a futures contract. There's no upfront cost for futures. The "price" quoted is the price you must pay at delivery.
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Quoted from Forex.com.bd-Editorial External answer — Personal Finance Stack Exchange Author: D Stanley Source score (net votes, not local likes): 2 Original post: https://money.stackexchange.com/a/124741 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. A futures contract is a contract to buy a commodity (or stock, or whatever) for a specified price at a specified time. So if you enter into a contract at a certain price, that's the price you'll pay. The market (spot) price is irrelevant (other than to measure opportunity cost or to determine how much it costs you to get out of the contract at the last minute). Note that technically you don't "buy" a futures contract. There's no upfront cost for futures. The "price" quoted is the price you must pay at delivery.
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