Futures Life Cycle
Chapter 2 introduced the futures products and various contract types. Chapter 10 explained the derivatives life cycle (DLC) of listed contracts and associated standard procedures. This chapter focuses on futures contracts and explains specifics peculiar to futures. This chapter serves as an extension of the Chapter 10, which introduced all the terminology and procedures deployed in this chapter.
Recall that a futures derivative is a contract to buy or sell some asset (underlying) on a future date for a specified price. The underlying assets include commodities, metals, and financial instruments such as eurodollar deposits, foreign exchange, stock, and other indices.
Futures are traded on exchanges and cleared by ...