A BOBL Futures Contract is a financial contract between two parties, in which one party agrees to buy a certain amount of a specific bond from the other party at a predetermined price, on a specified date in the future. The bonds that are traded under this contract are typically German Government Bonds (Bunds).
Are futures fixed income?
No, futures are not fixed income. Futures are contracts to buy or sell an asset at a future date, and are often used as a tool to hedge against price movements in the underlying asset. The price of a future contract is based on the price of the underlying asset at the time the contract is entered into, and does not change over the life of the contract.
How do you buy a futures contract?
When you buy a futures contract, you are agreeing to purchase a certain asset at a set price at a future date. Futures contracts are traded on exchanges, and the price is determined by supply and demand. The buyer of a futures contract is said to be "long," while the seller is "short."
When you buy a futures contract, you are not actually buying the underlying asset; rather, you are entering into a contract to do so at a later date. For example, you might buy a futures contract to purchase a certain amount of gold at a set price in three months' time. If the price of gold goes up, you will make a profit; if it goes down, you will incur a loss.
Futures contracts can be used for a variety of purposes, including hedging against price fluctuations, speculation, and arbitrage.
Do Treasury futures pay interest?
Treasury futures are derivatives contracts that are based on government debt securities. These contracts are traded on exchanges and they settle in cash. The price of a treasury future is based on the interest rate of the underlying government debt security. The interest rate on the underlying security is known as the "coupon rate."
Treasury futures do not pay interest. The price of the future is based on the interest rate of the underlying government debt security. The interest payments on the underlying security are paid to the holder of the security, not to the holder of the future.
How are futures quoted?
Futures prices are quoted in terms of the underlying asset, and are usually quoted in terms of per unit price. For example, a stock futures contract might be quoted in terms of $100 per share, meaning that each contract is worth $100 times the number of shares in the underlying asset. In most cases, futures contracts are quoted in terms of the underlying asset's currency, so a stock futures contract quoted in US dollars would be worth $100 times the number of shares in the underlying asset, in US dollars.
What are US Treasury bond futures?
A US Treasury bond future is a contract that obligates the holder to buy a US Treasury bond at a specified price on a specified date in the future. The contract is traded on the Chicago Board of Trade.
The price of the future is based on the price of the underlying Treasury bond. The price of the bond is determined by the market, and the price of the future reflects the price of the bond at the time the contract is entered into.
The date on which the contract expires is known as the delivery date. The holder of the contract is obligated to take delivery of the bond on that date. If the holder does not want to take delivery of the bond, they can close out their position by selling the contract before the delivery date.
Treasury bond futures can be used to hedge against changes in the price of Treasury bonds, or to speculate on the future direction of the bond market.