|
Silver futures are futures contracts where the commodity is silver. A futures contract is a simple contract which is traded on a special stock exchange called a futures exchange. Usually, silver futures contracts are of 5000 troy ounces of silver. They can be traded or dealt in parcels or multiples of 5000 troy ounces while the exchanges clearinghouse act as counterparty for all contracts, setting margin requirements, and so on. Silver futures are traded on many exchanges all around the world. They are primarily traded on COMEX, a subsidiary of the New York Mercantile Exchange in the U.S. Other major trading countries have their own silver futures and options called derivatives. In other words, silver futures are a bet about the predicted prices on silver at a specific time in the future. This could be a high or a low price. If your prediction is right, you get the amount to the value of the current silver prices and if you go wrong, you lose the money. When you deal with silver future contracts, you simply agree to buy a specific amount of silver in specific months silver prices predicted. For example, you want to buy 1000 ounces of silver at 6 dollars per ounce in three months to the day. In this case, the future date is termed as the delivery date or final settlement date while the pre-set or predicted price is called the futures price and the price of the underlying asset on the delivery date is termed as the settlement price. If an ounce of silver on that day is worth 10 dollars, you win 4 dollars or make a profit of 4 dollars since you are paying only 6 dollars for an ounce of silver that actually has a worth of 10 dollars while the seller loses as you are paying only 6 dollars instead of 10 dollars. If the situation is exactly opposite, then lose half your money! While dealing in silver futures, it is true that you do not get the silver and the transaction is all based on cash. Here you can not get silver back and hold on to it till the silver prices go up! Nevertheless, the future contracts can fortunately be rolled over into another contract. Remember, a futures contract is different than an option. With an option, the holder has an option to buy or sell but when it comes to silver future contracts, it is obligatory to do so as part of the contract. In other words, you are required by law, to pay! Kyles Humphrey is an experienced writer in silver market, mining & stocks, who frequently writes articles related to silver prices, silver spot price including tips on investment in silver. Please visit silverprices.com for more details.
Related Articles -
silver price, silver prices, prices on silver,
| 
