PDSnet Glossary

Term

Categories

Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

Versions

Name	synonyms = 1, variations = 2, abbreviations = 3

Publish: (0 = no, 1 = yes)

Definition

A futures contract which has as its underlying instrument a financial indicator such as an index or an exchange rate. Clearly, indexes and exchange rates cannot be delivered so 100% of financial futures are closed out before they expire. Financial futures are effectively a bet on the future progress of the underlying indicator. One party bets that it will go up, the other that it will go down and whoever is right takes money away from whoever is wrong. In our view, putting money into financial futures (or any derivative instrument) is similar to gambling on the roulette table at the casino. It cannot be considered to be any kind of investment.

Edit Glossary Term