I have a very good grasp of options but futures are so confusing to me. Suppose SPX is at 2500 and I want to buy a future to be able to purchase it at this same price in the future. Of course I need to put down some margin (10%?), but do I also pay an additional premium for the right to buy it at this price? Or is it more like a synthetic long using options, in which someone would sell a put and buy a call at the money for net-zero revenue and 100% exposure to the underlying in either direction?
Also, I read that VIX futures are usually in contango. I guess this gets to my question about premium. As I understand, contango means that traders are willing to pay more for a future price than they expect it to be worth. So if the SPX is expected to rise by 9%, and is currently at 2500, a trader might be willing to pay 2750 (10% more than current) for the benefit of locking in that price. Is that at all accurate?
Also, are most futures usually in contango, or just the VIX? Thanks so much if you can help me. Everything I read always seems way too detailed or way too general.
Submitted September 23, 2017 at 10:55AM by gnurd http://ift.tt/2wNCI4O
