How to find out at what price was future contract agreed upon?
How do you calculate future contract price?
Key takeaways from this chapter
- The futures pricing formula states that the Futures Price = Spot price *(1+Rf (x/365)) – d.
- The difference between futures and spot is called the basis or simply the spread.
- The futures price as estimated by the pricing formula is called the “Theoretical fair value”
Does futures have strike price?
There will be strike prices set above and below an existing futures price. Additional strikes are added by the exchange if needed as the market value of a futures contract moves up or down.
Strike (Exercise) Price.
| Calls | |
|---|---|
| Call Buyer/Holder | Call Seller/Writer |
| long call contract | short call contract |
How long can you hold a futures contract?
three months
The maximum duration for a futures contract is three months. In a typical futures and options transaction, the traders will usually pay only the difference between the agreed upon contract price and the market price. Hence, you don’t have to pay the actual price of the underlying asset.