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Open contracts |
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Open contractsContracts that have been bought or sold without completion of the transaction by subsequent sale or purchase, or by making or taking actual delivery of the financial instrument or physical commodity.Open contracts Similar MatchesCash settlement contractsCash settlement contractsFutures contracts such as stock index futures that settle for cash and do not involve delivery of the underlying. Set of contracts perspectiveSet of contracts perspectiveView of corporation as a set of contracting relationships among individuals who have conflicting objectives, such as shareholders or managers. The corporation is a legal construct that serves as the nexus for the contracting relationships. Conditional sales contractsConditional sales contractsSimilar to equipment trust certificates, except that the lender is either the equipment manufacturer or a bank or finance company to which the manufacturer has sold the conditional sales contract. Nondeliverable Forward Contracts (NDF)Nondeliverable Forward Contracts (NDF)Agreement regarding a position in a specified currency, a specified exchange rate, and a specified future settlement date, that does not result in delivery of currencies. Rather one party in the agreement makes a payment to the other party on the basis of the exchange rate at the future date. Contracts for differenceContracts for differenceCFDs are a derivative product designed for active traders who want to have extra leverage in their share trading.Instead of paying for purchases in full, they deposit a 'margin' with their broker (typically 20% of the total purchase value) and that margin requirement goes up and down in line with the rise and fall of their portfolio. In effect, the investor is able to speculate with much more money that he actually has by borrowing from his broker and using the shares he has bought as collateral. If his investments perform well, he can get rich quicker than if he was not trading on margin. If they perform badly, the broker will demand more margin payments which have to be paid in cash, and the investor may lose significant amounts.Contracts for differences, or margin trading, are risky, and not for novice investors. Most brokers do not offer a CFD service, and the market is dominated by a handful of brokers who specialise in this area. Margin requirements vary, and most brokers will ask for a deposit of £10,000 before allowing a new client to trade on margin. Further SuggestionsNexus (of contracts)Long term forward contracts |
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