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2. Short Futures
MENU - Futures Strategy Guide
Contents Courtesy of CME.com
Scenario:
This trader is a technician. He sees a major turnaround in the price of Euro FX Futures. He points out that chart patterns suggest a big downward move, the short-term moving average crossed under the longterm moving average, even the fundamentals look bearish. He has looked at the options market, but feels that a short futures position would be the best.
Specifics:
| Underlying Futures Contract: | September Euro FX |
| Futures Price Level: | 1.0100 |
| Days to Futures Expiration: | 65 |
| Days to Options Expiration: | 55 |
| Option Implied Volatility: | 14.9% |
| Position: | Short 1 Futures |
At Expiration:
| Breakeven: | 1.0100 (original futures price) |
| Loss Risk: | Unlimited; losses increase as futures rise. |
| Potential Gain: | Unlimited; profits increase as futures fall. |
Things to Watch:
Implied volatility has no effect on this position. If the trader has an opinion on volatility, he may consider another strategy. Other strategies may increase the reward and/or reduce the risk. Check the following page for follow-up strategies.
Follow-up Trading Strategies
MENU - Futures Strategy Guide
Contents Courtesy of CME.com