FAQ

What do I need to take into consideration if I short the ASX200?

Question: Hi, with the market going down shorting the ASX200 or other indexes must be a popular move. What do I need to take into consideration if I do this, and are there any strategies I can employ when shorting the index? Response: Since the global financial crisis, short selling has grown in popularity with…

What futures contracts are the most popular and who buys them?

Futures traders normally fall into two groups with each having a typical ‘holding period’, based on the purpose of that futures position. The first group of traders, hedgers, have an interest in the underlying commodity and are seeking to minimise price risk in the physical market. Farmers are typically hedgers, and normally hold positions from…

Why do futures prices converge on spot prices during the delivery month?

Why do futures prices converge on spot prices during the delivery month? Prior to expiry, the price of futures contracts will most likely either be at a premium to the physical or a discount. As the contract approaches expiry these two prices will converge, or meet. Why does this happen? There are a number of…