Learning : Financial Futures

Beginner

Futures on bonds, interest rates etc. It's more fun than it sounds!

Financial Futures

Money, money, money! Have you ever stopped and thought of all of the various ways money circulates through the global economy? It circulates as Currencies, Bonds, Stocks and more. Unfortunately for our friend James he lost a large portion of his money in a freak accident with his cat and his computer. But he has a chance to recoup his losses by trading financial Futures.

Financial Futures are Futures contracts that are based on the following categories of financial instruments:

Bonds
Currencies
Short-Term Interest Rates
Stock Indices

Each of these categories has unique characteristics but all of them are connected because they all revolve around money and investment. To become a successful Futures trader it is important that you become familiar with both the common characteristics and the unique characteristics of each Futures contract and category.

Let's take a look at the following eight Futures contracts to get an idea of how this exciting segment of the Futures market works:

10 Year US T-Notes Composite (Bonds) ZN
Euro-Bund, German Government (Bonds) FGBL
Euro FX (Currencies) EC
Australian Dollar (Currencies) AD
3 Month Euro Dollar (Short-term Interest Rates) GE
30 Day Federal Funds (Short-term Interest Rates) ZQ
E-Mini S&P 500 (Stock Indices) EM
FTSE 100 Index (Stock Indices) FFI

10 Year US T-Notes Composite (ZN)

10 year US T-Note Composite contracts are part of the Bonds sector and trade on the Chicago Board of Trade (CBOT) via GLOBEX. These contracts represent one U.S. Treasury note with a value of $100,000 and are quoted in U.S. dollars. Prices for 10 year US T-Note composite contracts move in 1/32 point increments with no limit on how far the price of each contract can move during a single trading day.

10 year US T-Note Composite contracts trade for the following expiration months:

H	March
M	June
U	September
Z	December

10 year US T-Note Composite contracts expire (stop trading) on the seventh business day preceding the last business day of the delivery month. 10 year US T-Note Composite contracts are cash settled.

10 year US T-Note Composite contracts are affected by supply and demand, and the following table lists various factors that affect those levels of supply and demand.

FACTOR	RESULT	TIME OF YEAR
Falling U.S. stock market	Increased Demand	Unknown
Rising U.S. stock market	Decreased Demand	Unknown
Falling U.S. interest rates	Increased Price	Unknown
Rising U.S. interest rates	Decreased Price	Unknown

Euro-Bund German Government (FGBL)

Euro-Bund German Government contracts are part of the Bonds sector and trade on the EUREX (EUREX). These contracts represent one European long-term debt instrument with a value of €100,000 and are quoted in euros. Prices for Euro-Bund German Government contracts move in 0.01 point increments with no limit on how far the price of each contract can move during a single trading day.

Euro-Bund German Government contracts trade for the following expiration months:

H	March
M	June
U	September
Z	December

Euro-Bund German Government contracts expire (stop trading) two business days before the delivery date. Euro-Bund German Government contracts are cash settled.

Euro-Bund German Government contracts are affected by supply and demand, and the following table lists various factors that affect those levels of supply and demand.

FACTOR	RESULT	TIME OF YEAR
Falling European stock market	Increased Demand	Unknown
Rising European stock market	Decreased Demand	Unknown
Falling European interest rates	Increased Price	Unknown
Rising European interest rates	Decreased Price	Unknown

Euro FX (EC)

Euro FX contracts are part of the Currencies sector and trade on the Chicago Mercantile Exchange (CME) via GLOBEX. These contracts represent €125,000 each and are quoted in U.S. dollars. Prices for Euro FX contracts move in $0.0001 point increments with no limit on how far the price of each contract can move during a single trading day.

Euro FX contracts trade for the following expiration months:

H	March
M	June
U	September
Z	December

Euro FX contracts expire (stop trading) on the second business day before the third Wednesday of the expiry month. Euro FX contracts are physically delivered at settlement.

Euro FX contracts are affected by supply and demand, and the following table lists various factors that affect those levels of supply and demand.

FACTOR	RESULT	TIME OF YEAR
Falling U.S. interest rates	Increased Demand	Unknown
Rising U.S. interest rates	Decreased Demand	Unknown
Falling European interest rates	Decreased Demand	Unknown
Rising European interest rates	Increased Demand	Unknown

Australian Dollar (AD)

Australian dollar contracts are part of the Currencies sector and trade on the Chicago Mercantile Exchange (CME) via GLOBEX. These contracts represent 100,000 Australian dollars each and are quoted in U.S. dollars. Prices for Australian dollar contracts move in $0.0001 point increments with no limit on how far the price of each contract can move during a single trading day.

Australian dollar contracts trade for the following expiration months:

H	March
M	June
U	September
Z	December

Australian dollar contracts expire (stop trading) on the second business day before the third Wednesday of the expiry month. Australian dollar contracts are physically delivered at settlement.

Australian dollar contracts are affected by supply and demand, and the following table lists various factors that affect those levels of supply and demand.

FACTOR	RESULT	TIME OF YEAR
Falling U.S. interest rates	Increased Demand	Unknown
Rising U.S. interest rates	Decreased Demand	Unknown
Falling Australian interest rates	Decreased Demand	Unknown
Rising Australian interest rates	Increased Demand	Unknown

3 Month Euro Dollar (GE)

3 Month Euro Dollar contracts are part of the Short-Term Interest Rate sector and trade on the Chicago Mercantile Exchange (CME) via GLOBEX. These contracts represent $1,000,000 each and are quoted in U.S. dollars. Prices for 3 Month Euro Dollar contracts move in $0.005 point increments with no limit on how far the price of each contract can move during a single trading day.

3 Month Euro Dollar contracts trade for the following expiration months:

F	January
G	February
H	March
J	April
K	May
M	June
N	July
Q	August
U	September
V	October
X	November
Z	December

3 Month Euro Dollar contracts expire (stop trading) on the second London bank business day before the third Wednesday of the expiry month. 3 Month Euro Dollar contracts are cash settled.

3 Month Euro Dollar contracts are affected by supply and demand, and the following table lists various factors that affect those levels of supply and demand.

FACTOR	RESULT	TIME OF YEAR
Falling LIBOR rates	Decreased Demand	Unknown
Rising LIBOR rates	Increased Demand	Unknown

30 Day Federal Funds (EM)

30 Day Federal Funds contracts are part of the Short-Term Interest Rate sector and trade on the Chicago Board of Trade (CBOT) via GLOBEX. These contracts represent $5,000,000 each and are quoted in U.S. dollars. Prices for 30 Day Federal Funds contracts move in $0.005 point increments with no limit on how far the price of each contract can move during a single trading day.

30 Day Federal Funds contracts trade for the following expiration months:

F	January
G	February
H	March
J	April
K	May
M	June
N	July
Q	August
U	September
V	October
X	November
Z	December

30 Day Federal Funds contracts expire (stop trading) on the last business day of the expiry month. 30 Day Federal Funds contracts are cash settled.

30 Day Federal Funds contracts are affected by supply and demand, and the following table lists various factors that affect those levels of supply and demand.

FACTOR	RESULT	TIME OF YEAR
Falling U.S. interest rates	Decreased Demand	Unknown
Rising U.S. interest rates	Increased Demand	Unknown

E-Mini S&P 500 (ZQ)

E-Mini S&P 500 contracts are part of the Stock Indices sector and trade on the Chicago Mercantile Exchange (CME) via GLOBEX. These contracts represent $50 times the Standard & Poor's 500 Index each and are quoted in U.S. dollars. Prices for E-Mini S&P 500 contracts move in $0.0025 point increments with no limit on how far the price of each contract can move during a single trading day.

E-Mini S&P 500 contracts trade for the following expiration months:

H	March
M	June
U	September
Z	December

E-Mini S&P 500 contracts expire (stop trading) on the third Friday of the expiry month. E-Mini S&P 500 contracts are cash settled.

E-Mini S&P 500 contracts are affected by supply and demand, and the following table lists various factors that affect those levels of supply and demand.

FACTOR	RESULT	TIME OF YEAR
Falling U.S. interest rates	Increased Demand	Unknown
Rising U.S. interest rates	Decreased Demand	Unknown
Falling U.S. corporate profits	Decreased Demand	Unknown
Rising U.S. corporate profits	Increased Demand	Unknown

FTSE 100 Index (FFI)

FTSE 100 Index contracts are part of the Stock Indices sector and trade on the London International Financial Futures and Options Exchange (LIFFE) via Euronext. These contracts represent £10 times the Financial Times Stock Exchange (FTSE) 100 Index each and are quoted in British pounds sterling. Prices for FTSE 100 Index contracts move in £0.005 point increments with no limit on how far the price of each contract can move during a single trading day.

FTSE 100 Index contracts trade for the following expiration months:

H	March
M	June
U	September
Z	December

FTSE 100 Index contracts expire (stop trading) on the third Friday of the expiry month. FTSE 100 Index contracts are cash settled.

FTSE 100 Index contracts are affected by supply and demand, and the following table lists various factors that affect those levels of supply and demand.

FACTOR	RESULT	TIME OF YEAR
Falling British interest rates	Increased Price	Unknown
Rising British interest rates	Decreased Price	Unknown
Falling British corporate profits	Decreased Demand	Unknown
Rising British corporate profits	Increased Demand	Unknown

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