Trading the slope of the yield curve using Treasury futures is a little like skiing the slopes of Utah. Steep or flat, there’s something for everybody. Just remember, when the slope changes, it can change fast. The yield curve represents yields across several maturities ranging from short term (1 month) to long term (30 years). […]

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The idea of hedging a stock portfolio with low-cost index futures can make you feel like that anxious kid again. Something spooky and unpredictable with every trading day, right? Maybe not. Bear in mind, hedges can be expensive. Before implementing a hedge, consider booking some of your gains, and rebalance your portfolio to the right […]

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If you’re considering new ways to take advantage of market movement, futures options can provide your futures trading with much of the same flexibility and leverage that equity options do for your equity trading. Refresher: futures are tradable financial contracts tied to physical products, including corn and oil, or financial instruments, including the S&P 500 […]

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What exactly happens when a futures contract expires? Can you end up with a few semitrucks full of corn in your cul-de-sac at settlement? The short answer is “no,” but the explanation requires covering a few basics, including closing and rolling futures contracts. The universe of futures products is frequently seen as a place where […]

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The leverage and flexibility of the futures markets is a magnet for some traders. But large, directional moves are also in play. That leaves the unprepared at risk of ending up on the wrong side of a fast-moving market—this summer’s crude oil and interest rate markets come to mind. In response, futures spreads can help […]

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Risk Happens. So prudent traders define their loss ahead of time and use stop orders to get out when they need to, right? Maybe not. There’s one scenario in the futures market that won’t let you out at any price. That’s when the market is “locked limit.” No safe stops here. Locked limits, either up […]

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Editor’s note: We’ve dusted off this article that originally ran on April 21, 2015. It’s worth a rerun because its usefulness for help tracking the Federal Reserve’s potentially too-close-to-call interest rate decision is just as important now as it was then. You can find Fed funds futures pricing on the CME Group website. The Fed […]

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Ever hear the story of farmers dumping excess grain in Lake Michigan rather than run up expensive storage costs and risk spoilage? Futures contracts eventually changed the water-logged destiny of future crops. The creation of these first derivative contracts allowed farmers to hedge their crop risk and protected grain buyers against volatile price swings. These […]

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Futures can be a straightforward and capital-efficient way to either speculate or hedge. You think the price of corn is going higher? Buying a /ZC corn futures contract is an easier way to lay a bet than buying a corn farm and growing your own. How about a short-term hedge on a big S&P 500 […]

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Traders are attracted to the futures market because of its fast pace, leverage, and flexibility. Yet, those benefits also come with the risk of large, directional moves that can catch unprepared traders on the wrong side of a trade. For instance, recent volatility in energy and interest-rate futures reminds us to consider using spreads as […]

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