Types of Futures
- Commodity Futures
The original and most widely know futures are traded based on the prices of agricultural products such as cattle, pork-bellies, and corn. Contracts based on industrial metals such as platinum and precious metals such as silver and gold also fall into this category.
- Financial Futures
Although commodity futures were invented first, financial futures, such as contracts based on Treasury Bonds, Foreign Currencies, and Stock Indices now represent the vast majority of futures trading volume. These contracts allow large financial institutions to take sizable positions in the markets without dealing with the underlying assets. Most of these contracts are cash-settled.
- Single Stock Futures
Single stock futures are futures contracts on individual stocks. These contracts have been in existence in Europe for some time, but they have only appeared in the U.S. since 2000, when Congress passed legislation lifting the ban on these products, which were already trading in Europe and elsewhere. A single stock futures contract is an contract to deliver shares of a specific stock at a specified expiration date. The size of these contracts is 100 shares, and about 200 of these contracts are traded at the OneChicago exchange.
