What happens with physical delivery when you are short a futures contract and it ...

Discussion in 'Commodity Futures' started by nravo, Feb 29, 2008.

  1. brokers get pissed if you're expose 3 days before FND and will close you out....

    I let a silver contract go just to see what would happen, ( I could cover the delivery)

    and I got a nasty e-mail with a sell ticket.........
     
    #11     Feb 29, 2008
  2. nravo

    nravo

    Imagine if you were long a futures and long an option on it, and the broker sold your futures position three days before the expiration date. You would then be naked for three days? Can this be true?
     
    #12     Feb 29, 2008
  3. Options expire before the futures for just this reason.

    That aside, delivery is *not* for large traders only, and brokers will not automatically close out your position (unless the broker simply doesn't allow delivery, like IB). Soy meal and oil, crude oil, gasoline, etc. are all extremely easy to take delivery of. (Basically you get a claim ticket and a bill for storage. If storage is short for whatever reason, you may need to put some effort into finding your own storage. Selling this stuff on the spot market isn't really that difficult--it's unlikely you will be "held hostage")

    If you're short something, look at the contract specs. Certainly whichever silver contract you're in specifies the grade, quantity, and delivery location of the silver.
     
    #13     Feb 29, 2008
  4. nravo

    nravo

    I thought the generally all expired on the same day. Hence, triple and quadruple witching days? I think my ES futures for March and the options on it both expire on the same day. Do you mean the options expire at a different, earlier, time on the same day?
     
    #14     Feb 29, 2008
  5. Your ES futures and options are cash settled, hence no delivery risk.

    Gold futures H8 contract LTD was 2/27/08, options was 2/26/08.

    Corn futures H8 contract LTD is 3/14/08, options was 2/22/08.

    Coffee, Sugar, Cotton, etc all have options which stop trading well before the contract.
     
    #15     Mar 1, 2008
  6. nravo

    nravo

    Are the ES futures and options cash-settled simultaneously? Or could one be left open after the other is settled, hence creating some naked risk.
     
    #16     Mar 2, 2008
  7. #17     Mar 3, 2008
  8. nravo

    nravo

    #18     Mar 3, 2008