A retender definition is a statement issued by a commodities exchange that clarifies the rules governing the retendering process for a particular commodity. Retendering is a process whereby a commodities exchange allows trading members to submit new bids for a contract that they have already been awarded. This can be done in order to try and get a better price for the contract, or if the original contract is no longer suitable for the member's needs.
The retender definition will state how many times a member can retender for a particular contract, as well as any other conditions that must be met in order for the retendering to be successful.
Why would you buy a futures contract?
Futures contracts are agreements to buy or sell an asset at a future date at a price that is agreed upon today. Futures contracts are used as a tool to hedge against price risk, or to speculate on the direction of the market.
There are many reasons why someone might want to buy a futures contract. For example, a farmer may want to lock in a price for their crops today, in order to avoid the risk of prices falling in the future. Or, a trader may believe that the price of a particular commodity is going to rise, and so they may buy a futures contract in order to profit from that price movement.
Futures contracts can be used to hedge against price risk or to speculate on the direction of the market.
Hedging is a risk management technique that is used to offset the potential losses that can be incurred from price movements. When hedging with futures contracts, the goal is to minimize the price risk of the underlying asset. For example, if a farmer is worried that the price of corn may fall in the future, they could buy a corn futures contract. If the price of corn does indeed fall, the farmer will be able to sell their corn at the higher price that is specified in the futures contract. This will offset the loss that the farmer would have incurred from the fall in the price of corn.
Speculation is the act of taking a position in the market in order to profit from price movements. Speculators typically take a view on the direction of the market, and then take a position (long or short) in the market accordingly. For example, if a speculator believes that the price of gold is going to rise, they may buy a gold futures contract. If the price of gold does indeed rise, the speculator will be able to sell their gold at a higher price and profit from the price movement.
What is the difference between futures contract and forward contract?
Futures contracts are standardized contracts that are traded on an exchange. Forward contracts are customized contracts that are traded off-exchange.
Futures contracts are traded on an exchange and are regulated by the Commodity Futures Trading Commission (CFTC). Forward contracts are not traded on an exchange and are not regulated by the CFTC.
Futures contracts are margined, meaning that both parties must put up a margin (collateral) in order to enter into the contract. Forward contracts are not margined.
Futures contracts are marked to market daily, meaning that the margin account is updated daily to reflect any gains or losses in the contract. Forward contracts are not marked to market.
Futures contracts are liquid, meaning that they can be easily traded and there is always a market for them. Forward contracts are not liquid.
Can we square off futures before expiry date? Yes, you can square off your futures before the expiry date. In order to do so, you will need to contact your broker and let them know that you would like to square off your position. Your broker will then take care of the rest of the process for you.
Which is more riskier futures or forward?
There is no definitive answer to this question as it depends on a number of factors, including the type of asset being traded, the time frame of the trade, and the level of experience of the trader. In general, however, futures contracts tend to be more volatile and therefore more risky than forward contracts. This is because futures contracts are traded on exchanges and are subject to the rules and regulations of those exchanges, while forward contracts are typically private agreements between two parties and are not subject to the same level of regulation. What are the three commodities? The three commodities are corn, wheat, and soybeans. Each commodity has different characteristics, which make them more or less suited for different purposes.
Corn is the most versatile of the three, and is used for everything from animal feed to ethanol production. It is also a popular food grain, and is used in many processed foods.
Wheat is mostly used for baking, and is a key ingredient in breads and pastries. It is also used in some animal feeds.
Soybeans are used for a variety of purposes, including oil production, animal feed, and as a meat substitute.