Derivatives without illusions
Futures, options, margin and expiry: how the contracts work, what the money is debited for every evening, and why leverage hurts even when the forecast is right.
9 steps · about 95 min · free
- 1Futures: an obligation, not an optionAn obligation, not an option.Article
- 2Initial marginHow much money one position locks up.Glossary term
- 3Initial margin: why a position can be closed without youWhy the position gets closed without you.Article
- 4Options: a right without an obligationA right you pay a premium for.Article
- 5Strike priceThe price everything is built around.Glossary term
- 6Contango and backwardation: why a long futures position meltsWhy a long position decays on its own.Article
- 7Expiration: what happens on the contract's last dayWhat happens on the final day.Article
- 8Hedging: insurance paid for with returnInsurance paid for with return.Article
- 9Why leverage ruins the result even when the forecast is rightThe main reason for losses on this market.Article