What is a Futures Contract?
A Future is a contractual agreement to buy or sell a particular commodity or financial instrument at a pre-determined price on a specific date in the future.
Futures contracts can derive from a variety of assets, from traditional commodities like corn, wheat, and orange juice to different asset classes, like government bonds, interest rates, energies and stock indices.
Futures are highly liquid exchange traded financial instruments, meaning individuals can trade on tight spreads. The transaction costs are low, and their pricing is transparent due to the level of specificity found in Futures Contracts, as well as the regulations imposed by the various exchanges.
No physical delivery
Saxo Bank does not support physical delivery of the underlying security on expiry of a Futures Contract. On or before the expiry of a Futures Contract, Saxo Bank will cash settle a client's positions on their behalf. Read more about expiry of Futures.
Futures trade on margin
Since Futures contracts are essentially agreements to buy or sell a certain asset at a given date in the future, actual payment does not happen upfront. Instead, buyers and sellers of Futures must place collateral for the trade. This is also known as "margin".
The size of the margin is determined by the Futures exchange and is the same for all traders. Depending on the asset you are trading, expect to be required to place around 1%-10% in margin.
Use your Stock portfolio as margin
To provide you with extra flexibility when managing your portfolio, Saxo Bank allows you to use the value of your Stocks as collateral for margin trading. This means you have more flexibility when you spot a great trading opportunity. See all Futures Trading Conditions
Trade Contract Options with Saxo Bank
To complement our Futures offering, Saxo Bank gives you access to trade the world’s most liquid exchange listed options contracts. We call them Contract Options. Contract Options are a great alternative to Futures trading.
Both Contract Options and Futures are listed on a derivatives exchange and provide you with access for trading the worlds most liquid markets, such as currencies, indices, commodities etc.
Read more about Contract Options.