FUTIDX trading

G

galletgun

New Member
#1
#1
Hi,
everybody Karthik here.

This is my first post in this forum.
so without much much further a due let me get on with my query.

I am new to Futures trading, I was looking forward to trade in Nifty S&P futures, so I have come up with couple of doubts which I am hoping to get clarity upon, I will use a scenario for the same.

Lets say that Sam decides to buy Nifty FUTIDX 1 lot at 5400 (50 shares)from John.

Now on the same day the Index raises to 5410, so the total profit earned by Sam will be 50x10=500, right?

Now the second day the index again goes up by 10 points, will Sam make 20x50?.......since he bought the futures at 5400?

And John the next day John realizes that he's making loss so he'll choose to exit the counter by buying short at 5425 from Jack, so there by John has closed his position right?

Now my question is what will happen to the contract owned by Sam? will this speculation take place now between Sam and Jack?

And also lets say that the Index has now gone up to 5450! since Sam entered this at 5400, will he now make profit of 50x50?

The contract was sold to John(the original seller of the contract to Sam) by Jack,which in turn cleared John's position, since Jack now is making loss by 25 points, who will pay Sam remaining 25 worth profits if my understanding is correct?
If my post is confusing I apologize :(

Thank you for reading,
Karthik
 
a2zalpesh

a2zalpesh

New Member
#2
#2
galletgun said:
Hi,
everybody Karthik here.

This is my first post in this forum.
so without much much further a due let me get on with my query.

I am new to Futures trading, I was looking forward to trade in Nifty S&P futures, so I have come up with couple of doubts which I am hoping to get clarity upon, I will use a scenario for the same.

Lets say that Sam decides to buy Nifty FUTIDX 1 lot at 5400 (50 shares)from John.

Now on the same day the Index raises to 5410, so the total profit earned by Sam will be 50x10=500, right?

Now the second day the index again goes up by 10 points, will Sam make 20x50?.......since he bought the futures at 5400?

And John the next day John realizes that he's making loss so he'll choose to exit the counter by buying short at 5425 from Jack, so there by John has closed his position right?

Now my question is what will happen to the contract owned by Sam? will this speculation take place now between Sam and Jack?

And also lets say that the Index has now gone up to 5450! since Sam entered this at 5400, will he now make profit of 50x50?

The contract was sold to John(the original seller of the contract to Sam) by Jack,which in turn cleared John's position, since Jack now is making loss by 25 points, who will pay Sam remaining 25 worth profits if my understanding is correct?
If my post is confusing I apologize :(

Thank you for reading,
Karthik
Click to expand...


" JACK AND JIL WENT UP THE HILL"
" KARTHIK CALLING KARTHIK"
:clap:

Heyyyyy karthik, hi

we are living in 21st century.
forget all confusion as mr albert einstien says, "out of clutter, find simplicity"

today we are dealing in electronic exchanges.
we have to check on the screen only bid - ask spreads for any trade i.e fresh position or square off.trade clearance will be made by exchanges in clearing house like banking clearing system.

we do not have to bother about the bidder is JACK OR JIL.
Finish or square of any time during trading hours and relaxxxxxxxxxx.
 
G

galletgun

New Member
#3
#3
hi a2zalpesh,
Thank you for your delightful and humorous reply!:lol:

Okay I will forget all the Jack and Sam stuff..

I just want to know that, if I were to enter the Index at 5400, then if it continues to climb and now by 10th day it has reached 5450! I now have 50 points profit regardless of whoever owns the contract right?

And also If I sell somebody the contract thinking it may be a bearish market and the market does go down, and if I sense that the market may come back up, once when I buy back my sold position, I will have ended my obligation right?
 
O

OptionsAce

New Member
#4
#4
galletgun said:
hi a2zalpesh,
Thank you for your delightful and humorous reply!:lol:

Okay I will forget all the Jack and Sam stuff..

I just want to know that, if I were to enter the Index at 5400, then if it continues to climb and now by 10th day it has reached 5450! I now have 50 points profit regardless of whoever owns the contract right?

And also If I sell somebody the contract thinking it may be a bearish market and the market does go down, and if I sense that the market may come back up, once when I buy back my sold position, I will have ended my obligation right?
Click to expand...
Karthik,

1. The way stock exchanges are structured, it is impossible to find out who the counterparty is. The idea of an exchange is that you need not know who the counterparty is, as the exchange takes guarantee for the trade.

2. Yes, the position is closed. Since you bought the lot at 5400 and sold it at 5425, you are in the money, irresepective of where the market moves. The settlement will be done at the end of the contract (month-end).

Hope this answers.
Also, be extremely careful about using FUTIDX. It multiplies the profits and also the losses.

Cheers,
OptionsAce
 
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