Quick—there is a freeze in Florida, so buy orange juice futures! You have probably heard this one before, but you never thought about doing it because you know nothing about futures contracts. Furthermore, given all that you have had to learn lately as part of your investments education, you are not enthused about learning too much about futures contracts at this time. Nevertheless, it would be helpful to understand what people are talking about when they discuss futures, and even to mull them over in your mind in case one day you want to use futures as part of your portfolio strategy. Therefore, you realize a little effort in this area might be worthwhile. At the very least, you will be able to talk the talk.
Chapter 20 covers futures, the other derivative security of importance to many investors. Although our discussion pertains in general to all futures markets, our primary interest is financial futures as opposed to commodity futures. As with options, futures allow investors to manage investment risk and to speculate in the equity, fixed-income, and currency markets.
AFTER READING THIS CHAPTER YOU WILL BE ABLE TO:
Physical commodities and financial instruments ...