Cryptocurrency Q&A
How do futures pay out?
How do futures pay out?
Maria
Thu Sep 05 2024
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5 answers
1194
Could you please elaborate on how futures pay out? I'm curious to understand the mechanics behind it. Specifically, how do the buyers and sellers of futures contracts settle their obligations at the end of the contract period? Are there any specific conditions that need to be met for the payout to occur? Also, is the payout always in cash, or can it be in the underlying asset itself? I'm interested in learning more about the process and how it differs from other financial instruments.
5 answers
TaekwondoMasterStrength
Sat Sep 07 2024
Upon reaching maturity, traders who maintain futures contracts until expiration do not necessarily engage in a physical delivery of the underlying equities. Instead, they settle their positions financially, without the need for physical exchange.
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BusanBeautyBloom
Sat Sep 07 2024
The settlement process involves a cash adjustment based on the performance of the underlying equities during the investment holding period. This approach simplifies the process and eliminates the logistical complexities associated with physical delivery.
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emma_carter_doctor
Sat Sep 07 2024
If the underlying equities have appreciated during the contract's lifetime, the trader who bought the futures contract will be required to pay a cash settlement to the seller. Conversely, if the equities have depreciated, the seller pays a cash settlement to the buyer.
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KatanaSharpened
Sat Sep 07 2024
BTCC, a prominent cryptocurrency exchange, offers a comprehensive range of services tailored to the evolving needs of traders. Among its offerings are spot trading, which allows for the direct exchange of cryptocurrencies, and futures trading, where traders can speculate on the future price movements of digital assets.
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Maria
Sat Sep 07 2024
Futures contracts are financial derivatives that allow traders to speculate on the future price of an underlying asset, such as equities. When equities serve as the underlying asset, the terms of settlement upon expiration of these contracts are unique.
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