With the launch of Bakkt Futures, I've noticed a lot of folks here asking what futures really are, or getting the whole idea mixed up, or just tossing around terms without clarity. I'm gonna try to break it down in this thread, keeping it as straightforward as possible, using real examples from BAKKT and CME bitcoin futures when I can, plus other cases.
DEFINING FUTURES
Futures are basically contracts that require the buyer (or seller) to purchase (or sell) an asset, which is known as the "underlying asset". This can be something like a physical good or a financial instrument, all at a set price on a future date.
Let’s look at a quick example:
If I buy a BAKKT future at 7,942.5, that means when the contract expires on October 17, 2019, I’m obligated to buy one bitcoin from Bakkt Warehouse for $7,942.5. The actual delivery happens the next day, October 18, 2019. I can trade this future until October 16, 2019.
On the flip side, if I sell a BAKKT future at 7,942.5, it means that on the same expiration date, October 17, 2019, I have to sell one bitcoin from Bakkt Warehouse at $7,942.5.
Here's a breakdown of the key dates related to a future:
FTD (First Trade Date): when you can first start trading the future contract.
LTD (Last Trade Date): the last day you can trade the future contract.
FND (First Notice Day): this is when the exchange can notify someone holding a long future position about the delivery of the underlying asset (in this case, Bitcoin). This is also the first day the exchange can inform the seller about the delivery.
Good thread, even though this isn't exactly Beginner material. No beginner should be trying futures just yet. They'd do better to learn more about the underlying tech, or buying directly from either an exchange or some other trusted individual or company OTC or P2P.
If you think there's a more appropriate section for this thread, please make a proposal.
I understand what you mean, but this thread is meant to make everyone understand the mechanics of a future contract, it is not a financial advice.
Probably adding a little disclaimer on the first post then.
I will detail also how leverage on the future works, explaining why these are highly speculative instruments.
It might be better suited in the same section I had my thread regarding bakkt before it officially launched:
https://bitcointalk.org/index.php?topic=5186550
It got the most exposure for those who frequent the forums. Due to I almost didn't see your thread since I rarely check the beginners section and wouldn't think of advanced material should be a topic someone who is new to the forums and crypto in general would comprehend more or less be interested in to start of on.
I was not aware of this (bolded)!
Thanks for the in depth explanation of the workings of these different systems.
Now would you like to tackle and add the options on futures on cme?
https://www.cmegroup.com/education/courses/options-on-futures-for-equity-traders/why-options-on-futures-gives-added-benefit-of-diversifying-risk.html
Options are a much more complicated issue.
Lot of advanced math on these. Or even without math, if I try to explain intuitively lot of stuff to discuss.
I can try, once I have finished this, if I have enough supporter on this issue.
Let me know!
Hull Trading Company (acquired by Goldman Sachs in 1999) was very successful in trading with Options. very interesting topic too.
The Wall Street Code - VPRO documentary - 2013
EDIT: follow up with an other good video about the Flash Crash 2010 - VPRO documentary - 2011 (had the "pleasure" to experience this event in may 2010 with a huge open position in EUR/USD as a Newbie )
EDIT2: Quants - The Alchemists of Wall Street - VPRO documentary
^^^--- Thx guys IOU both sM+
Maybe you should combine your efforts and make a guide for Regular Bitcoiners to understand the impact these new movers are and will be having on the markets..
Fucking h8 goldman Ballsacks!
EdiT:
This is a great video!
I said it is still work in progress.
I will add this when I have described the more important things I have detailed in the OP.
Adding to the list though.
it looks like it will become a full time job take your time Buddy! all with some brain will be patient.
btw, my "thank you" post got deleted by "Moderator: MiningBuddy". unfortunately don't feel happy with Thermos private playground anymore and working on something for real Quants.
Alright. I'm waiting patiently. I've been wanting to know and understand what futures contracts mean. I always hear about CME futures opening and expiry without having even the slightest idea about it. But thanks to your thread, I've gotten to know a thing or two. I'll be on the lookout for when you add new content.
Exactly.
This is a beginner section posts, and books have been written of futures, and careers have been built on them. So I eventually have to draw a line on the sand!
I dont know how to do if I will ever dare into writing a similar post on options.
It is helpful if you can add a section that guides on how to get expired days of Bitcoin futures on different platforms, CME, CBEO, Bakkt. I do believe that Exprired days of Bitcoin future contracts have very big impacts on bitcoin price around those days. Price can move upwards or downwards considerably around expired days.
Honestly, I have still not known how to get Bitcoin future contract's expired days. I much appreciate if you or anyone else can help.
Expiry dates are easy to find on the description of the contract:
CME:
So with a simple calendar of with some excel sorcery you can easily find why you are looking for.
Tomorrow I will anyway provide you with a list of all the past expiries.
EDIT: here you go:
Ticker Month Last Trade First Notice First Delivery Last Delivery BTCX8 Nov 18 30/11/2018 30/11/2018 30/11/2018 30/11/2018 BTCZ8 Dec 18 28/12/2018 28/12/2018 28/12/2018 28/12/2018 BTCF9 Jan 19 25/01/2019 25/01/2019 25/01/2019 25/01/2019 BTCG9 Feb 19 22/02/2019 22/02/2019 22/02/2019 22/02/2019 BTCH9 Mar 19 29/03/2019 29/03/2019 29/03/2019 29/03/2019 BTCJ9 Apr 19 26/04/2019 26/04/2019 26/04/2019 26/04/2019 BTCK9 May 19 31/05/2019 31/05/2019 31/05/2019 31/05/2019 BTCM9 Jun 19 28/06/2019 28/06/2019 28/06/2019 28/06/2019 BTCN9 Jul 19 26/07/2019 26/07/2019 26/07/2019 26/07/2019 BTCQ9 Aug 19 30/08/2019 30/08/2019 30/08/2019 30/08/2019 BTCU9 Sep 19 27/09/2019 27/09/2019 27/09/2019 27/09/2019 BTCV9 Oct 19 25/10/2019 25/10/2019 25/10/2019 25/10/2019 BTCX9 Nov 19 29/11/2019 29/11/2019 29/11/2019 29/11/2019 BTCZ9 Dec 19 27/12/2019 27/12/2019 27/12/2019 27/12/2019 BTCH0 Mar 20 27/03/2020 27/03/2020 27/03/2020 27/03/2020
Bitcoin is possibly more fungible then oil is an idea from reading that though I think oil when an oil oil field is established is then quite consistent in its quality and exchangeable as a barrel with most oil of that type. Venezuela has this problem of oil which does not qualify for sale without refinement, that little detail has made them poorer sadly.
Are they really obligated to buy, if BTC goes to $1 then the contract expires worthless surely. It doesnt then become a liability where I owe 7491 in difference from the asset to what I promised to pay. Or is that options Im thinking of.
You are obliged to pay.
You actually have already have already paid it, as the exchange doesnt wait until last day to ask you 7,941 USD: he rather ask you to cover the margins daily.
This is something I am going to detail in one of the next improvement of the OP post.
OMG, im shocked, really its walls of text to explain one way of investing? I mean why there is need to create such complex ways of investing in Bitcoin world?
Buying is best investment, why complicate things? Often its to confuse less bright or people less beign able to manage their funds, to make them make wrong decisions and loose money.
I really don't like complicated instruments of investment, banks love to create them to steal money from customers over and over. Its really sad how many people falling for that.