I am new to the futures game and i have a question, it may be a dumb one but i would apprecaite a response. From my understand a futures contract, say for wheat, gives the holder the obligation to buy an certian amount on wheat on the settlement date... so say when the settlement date arrives and for whatever reason i dont offset my position by going long or buying short then i will be required to buy ex. $50,000 of wheat? Also is it the same thing with Emini's? what am i buying for emini if i dont offset by position by the settlement date. Has anyone expeirienced this before? holding till the settlement and going through with the contract? Thanks in advance
time to do some home work. http://www.cme.com/ lesson #1. Don't trust anyone on a forum for information you can easily dig up yourself. just go read the contract specifications. some contracts are cash settled. i.e. if you have a profit, the clearing house will pay your broker, and your broker will deposit the money in your account. Otherwise your broker will take money out of your account to give to the clearing house.
Like Tums said, some spend time at www.cme.com and www.cbot.com Both sites will answer most questions about the structure of their products.
In regards to the The YM mini contracts, if you hold until expiration, the contracts are settled with a "special quotation price" that is similar to how index options are settled. The opening prices of all 30 stocks of the dow determine the special quotation price. It is my understanding that the special quotation price is not in whole numbers, and may include decimals. For example, say you are long one YM at 12,500, but the special quotation price is 12,512.35, then you would make $61.75 per contract (12.35 * 5) . This is different than how YM usually trades, because it trades in 1 point increments. Hope that helps on the mini index front.
You will only have to worry about being delivered, or having to make delivery if you are trading a deliverable commodity. That being sad, most FCM's will notify you when you are close to taking delivery so you have time to get out. If you are delivered, then can have the commodity re-tendered and put back on the market for the next contract if it qualifies. There will be a re-tendering fee of $100 approximately per contract, but a small price to pay compared to actually taking delivery.