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Strategies & Market Trends : ThE WoNdErFuL wOrLd Of OpTiOnS
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To: Agamemnon who wrote (277)2/21/1997 11:07:00 PM
From: JohnV   of 308
 
Ag, in regard to your delivery scenario, futures are all marked to market daily and settled in cash. That means that at the end of the day, you settle your loss/gain and essentially start the next day with a new contract. Futures are also highly liquid and there will almost always be a buyer for your contract since its price that matters (the definition of a commodity). To bring the market to equilibrium, you lower your price until it gets picked up. Believe me, there's plenty of competition in the pits so you won't get raped too much.

If you had a forward contract, then yes you could expect a whole lot of OJ in your name at the CBOT (or wherever is specified in the contract itself). The future contract is different.

Hope that helped.
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