I just learned about "marked to market"...Futures Spread Trading...WOW!

I

increasenow

just called my broker and learned about "mark to market"...okay...I open A Eurodollars spread today at 5 and it closes at 10 today...5x5 ticks are added to my accout...tomorrow, basing off of my open position start point of 5...if it goes to -5..then 10x10 ticks are subtracted from my account...I THOUGHT I just get a gain or loss when I close out the futures contract spread...hmmm...insight...
 
Marking-to-Market: To debit or credit on a daily basis a margin account based on the close of that day's trading session. In this way, buyers and sellers are protected against the possibility of contract default.
 
Mark-to-Market: Daily cash flow system used by U.S. futures exchanges to maintain a minimum level of margin equity for a given futures or option contract position by calculating the gain or loss in each contract position resulting from changes in the price of the futures or option contracts at the end of each trading day.
 
Yes, that is the function of the clearinghouse of the exchange. To match trades and credit and debit respective clearing members who in turn credit and debit their customers or fcms who then credit and debit their customers, daily. When you have an open postion your performance bond is trasfered to the clearing house, when you don't it is held by your fcm, transfered daily. Fabulous business model for all involved, everyone gets a piece of the rake+sit on a big overnight float earning interest from perfomance bonds posted by participants, $10's of millions for smaller fcms to $100's of millions for the clearing house while all counterparty risk is guaranteed and assumed down the line.
 
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