Futures Equivalent

The number of futures contracts needed to be associated with a speculative option position. The futures equivalent can be calculated by taking the number of options and multiplying it by the previous day's risk factor (delta) for the same option series.

This term is generally used to refer to the equivalent position in futures contracts that is needed to have a risk profile identical to the option. This Delta is used in delta-based margining and risk analysis systems. Delta based margining is an option margining system used by certain exchanges. This system is equivalent to changes in option premiums or to changes in future contract prices. Future contract prices are then used to determine risk factors on which to base margin requirements. A margin requirement is the amount of collateral or funds deposited by customers with their brokers.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Futures contract — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond …   Wikipedia

  • futures — Commercial contracts calling for the purchase or sale of specified quantities of a good at specified future dates. The good in question may be grain, livestock, precious metals, or financial instruments such as treasury bills. Up until the time… …   Universalium

  • futures contract — An agreement to buy or sell a fixed quantity of a particular commodity, currency, or security for delivery at a fixed date in the future at a fixed price. Unlike an option, a futures contract involves a definite purchase or sale and not an option …   Accounting dictionary

  • futures contract — An agreement to buy or sell a fixed quantity of a particular commodity, currency, or security for delivery at a fixed date in the future at a fixed price. Unlike an option, a futures contract involves a definite purchase or sale and not an option …   Big dictionary of business and management

  • Commodity Futures Modernization Act of 2000 — The Commodity Futures Modernization Act of 2000 (CFMA) is United States federal legislation that officially ensured the deregulation of financial products known as over the counter derivatives. It was signed into law on December 21, 2000 by… …   Wikipedia

  • U.S. Futures Exchange — (USFE) is a Chicago based, electronic futures exchange. USFE was originally Eurex US who bought BrokerTec, but applied and received its own futures exchange license from the U.S. Commodity Futures Trading Commission. In October 2006, Man Group… …   Wikipedia

  • Forgotten Futures — Infobox RPG title= Forgotten Futures caption= Image by Stanley Wood often used in Forgotten Futures advertising designer= Marcus L. Rowland publisher= Heliograph Inc. (in print), author (CD ROM and web site) date= 1993 , revised 1998 , 2005 genre …   Wikipedia

  • Sydney Futures Exchange — The Sydney Futures Exchange (SFE) is both a futures exchange and options exchange located in Australia. The 10th largest derivatives exchange in the world, SFE provides derivatives in interest rates, equities, currencies and commodities.The… …   Wikipedia

  • London International Financial Futures and Options Exchange — This article is about the LIFFE, until the takeover by Euronext LIFFE Trader opposite Cannon Street station. The London International Financial Futures and Options Exchange (LIFFE, pronounced life ) is a futures exchange based in London. LIFFE is …   Wikipedia

  • index futures — A futures contract on a financial futures market, such as the London International Financial Futures and Options Exchange, which offers facilities for trading in futures and options on a financial index. On the FTSE 100 Index (see Financial Times …   Big dictionary of business and management

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.