educationnal question

F

fxintruder

I'am newb in the futures world coming from forex. There is one thing i don't understand concerning the futures trading.
THE QUOTED PRICE!!! (sorry to be to newb).

Is there a bid and ask ?
If it is the case is this quote is the underlying, or the contract itself.
I mean with options you have the strike price and your trade the option value;
There is a second thing i don't understand: you close your position by selling back if you were long. For me it means you are in the obligation to sell live cattle at the limit date. I mean you're always in the market. No?
If one could explain, these things are to obvious that no document explain them.
 
1) Yes, there is a "bid" and "ask".
2) The quote is on the contract whose value is derived from the underlying commodity.
3) As long as you offset your "long" futures position before (FND), First Notice Day, your actual position is a futures contract. After FND, you can be assigned delivery. Your actual position would then become the underlying commodity. This can be an expensive thing to deal with if you're not a commercial user of the underlying commodity.
4) That isn't a problem with cash-settled contracts.
 
Remember future contracts have a tick value. For example, for every $1 move in E-Mini S&P future contract you would gain or lose $50. This is why futures are so attractive. Oh and there is no pattern day trading rule for futures contract.
 
Quote from fxintruder:

Thank you guys, these answers are cristal clear. Thanks again.
More...

You may wish to check out these trading books. They help me understand what the heck was going on with the markets. There is a list off of Alex's site http://www.puretick.com/reading.html A lot can be found at your local book store so you can go in, grab a moca and read without having to actually buy anything.
 
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