Outline the procedure involved in buying a futures contract.

Posted: January 10th, 2022

4 (a) Outline the procedure involved in buying a futures contract.

(b) Indicate the implications of being long in a futures contract.

(c) Indicate the implications of being short in a futures contract.

(d) What are the procedures for closing out these positions prior to delivery? (LO 19.2)

On ASX Trade24 the quotation of the three-year Treasury bond futures contract is such that traders can easily follow a ‘buy low sell high’ rule. Construct an example that shows how this works. (LO 19.2)