1. Spot price: price at which an asset trades in the spot/physical market
2. Futures price: price at which the futures contract trades in the futures market
3. Contract cycle: the period over which a contract trades.eg. one month, two month, three month contracts.
4. Expiry date: the last date specified in the futures contract, at the end of which the contract will cease to exist.
5. Delivery margin: the amount of asset that has to be delivered under one contract.
6. Basis: futures price-forward price.
7. Backwardation: negative basis is backwardation
8. Cost of carry: storage cost+interest that is paid to finance the asset
9. Initial margin: amount that must be deposited in the margin accout at the time a futures contract is first entered into
10. Marking to Market (MTM): the process of adjusting the margin account to reflect the investor's gain or loss depending upon the futures closing price.
11. Maintenance Margin: margin set to ensure that the balance in margin account never becomes negative.
12. Additional Margin: this is imposed by exchange when it fears that the market have become too volatile and may result in some payment crisis
2. Futures price: price at which the futures contract trades in the futures market
3. Contract cycle: the period over which a contract trades.eg. one month, two month, three month contracts.
4. Expiry date: the last date specified in the futures contract, at the end of which the contract will cease to exist.
5. Delivery margin: the amount of asset that has to be delivered under one contract.
6. Basis: futures price-forward price.
7. Backwardation: negative basis is backwardation
8. Cost of carry: storage cost+interest that is paid to finance the asset
9. Initial margin: amount that must be deposited in the margin accout at the time a futures contract is first entered into
10. Marking to Market (MTM): the process of adjusting the margin account to reflect the investor's gain or loss depending upon the futures closing price.
11. Maintenance Margin: margin set to ensure that the balance in margin account never becomes negative.
12. Additional Margin: this is imposed by exchange when it fears that the market have become too volatile and may result in some payment crisis
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