Do futures give you free leverage?

[Overnight]

Thanks everyone. I figured it could not be "free". Leverage is valuable, so a person selling the future should want to charge for it. Also, the person selling the future has to cover the risk that the greatly leveraged product increases (or decreases based on the future) hugely, which costs something (or they have to bear that increased risk themselves and should get compensated for it). So it all makes sense that they should have a cost.

When you hold a futures contract, you do not pay or receive money in the form of interest. So just ignore whatever lead you to that conclusion.

You would know this yourself if you have ever held a futures contract.

 

[murray t turtle]

I understand that you can get leverage using futures on an index, say SPX, as opposed to just buying SPX. Does that give you free leverage? I.E., instead of having 100% of your account in SPY, could you have [20%] of your account in a long SPX (or SPY I guess) future for the same long exposure, and have the remaining [80%} in an ultra-short bond fund, getting that free interest?

I suspect with 99.99% certainty the answer is no, but thought I would ask. I suspect the future pricing will take that "interest" component into account.

Thanks!!!

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Good guess, seldom is anything free. But my banker dad caught plenty of fish\ with free fish bait. He preferred Eagle Claw gold hooks. So never say nothing is free\LOL
Cash Coyne of Bright Daytrading Co disclosed leverage is a two edged sword.
I did have some one give me some free Tulip Time stainless steel flatware, they got it thru a bank promotion....................................................

 

[SoyUnGanador]

When you hold a futures contract, you do not pay or receive money in the form of interest. So just ignore whatever lead you to that conclusion.

You would know this yourself if you have ever held a futures contract.

Nooooo, I never said that. The charge is built into the pricing.