Can I really be that dumb????

Discussion in 'Financial Futures' started by SideShowBob, Jan 19, 2006.

  1. Just the other day I was reading the IB website about futures delivery. Then I happened to notice there was no bid/ask in the Feb 2006 QM. So I check the specs....DOH!!!!! it expired today. After a fairly frantic call to IB I discovered it settles in cash and it'll be fine with my final profit/loss credited over the weekend (fine other than my positions being liquidated -- I already bought March contracts).

    Now the big question -- has anyone here ever done this and had to take physical delivery? I've heard the old stories about the guy who dies and his wife gets truckloads of sugar....but has anyone actually done this?

  2. I have never done this ... But I know an old-time trader that forgot to roll his soybean positions (he was a big alcoholic) and ended up taking delivery of 3.5 tonne of beans, so he rented a storage to store it (it doesn't go bad that quickly) and then ended up selling it with no less. Of course he was making around >$5M a year then, so this is just fun for him, a good story to tell over drinks.

  3. I dont think u have to deliver the actual product, futures settle into cash.

    Might be wrong tho, in case someone at the opposite side of your trade wants to deliver or be delivered.
  4. In my case QM settles in cash so I'm OK. But some futures do settle in physical commodities...lean hogs and the like....YIKES!
  5. Well, buy a big freezer just in case.

  6. tomcole


    Its not a big deal. You can always EFP into the next futures month.
  7. ids


  8. tomcole


    That seems pretty strict. But it gives others great info as to when forced liquidation will occur. Thanks!
  9. StreamlineTrade

    StreamlineTrade Guest

    As a rule of thumb, I believe traditional commodities settle in hard product, but financial futures settle in cash.

    Good brokers always give you the option as to whether you wish to take physical or not- should you have a position at expiry. This is usually dealt with when you open your account.
  10. ids


    I would not recommend any rules of thumb. CBOT and Eurex government bond futures are settled in delivery, for example. Lean Hog on CME settle in cash. IPE oil is settled both ways. It is absolutely necessary to know what you are trading. IB does not accept delivery option to reduce cost of operations.
    #10     Jan 20, 2006