/biz/ - Business & Finance

[Anonymous No.4930225]

Ameritard here, what the fuck is a future?

[Anonymous No.4930232]

European here, you don't have a future I'm afraid.

[Anonymous No.4930245]

>>4930232
t. Muhammad

[Anonymous No.4930247]

>>4930225
it's the mumble rap of finances, doesn't worth shit, a waste of time and will fuck you up

[Anonymous No.4930248]

>>4930225
I don't support people who can't use search engines

[Anonymous No.4930255]

>>4930232
we got one he's friends with drake.
i just don't know how he's gonna effect bitcoin tomorow
also, nice continent (not)

[Anonymous No.4930272]

You know HI/LO, the game?

That, but with Bitcoin price.
Consider that in the last months smart money pumped Bitcoin, so now that the price exploded with normies adoption too, you can easily imagine if they will bet HI or LO.

[Anonymous No.4930277]

>>4930225

Um. Americans came up with futures for their famers.

Basically. It was a system that farmers could pre-sale their crops to speculators so they could buy seed to plant and then they'd already have a buyer in the fall so the farmer wouldn't have to dick around with finding someone in the fall.

And then other shit got added to the exchange like gold, oil, copper, and random shit.

Basically a future is selling something to someone now and delivery in the future. Its a bit more complicated than that because there is margin and escrow, but basically you promise to sell someone a future of btc at a higher price than it is now and the exchange holds it on margin until then and then in the future the buyer pays and you get your money.

It's not that simple, but its the concept...

Oh and you can short buy barrowing something and selling it now with the intention of buying it back at a future price that is lower than you sold it and giving it back to the buyer.

[Anonymous No.4930285]

>>4930225
Future is a famous musician who's going to be making his big investment in BTC tomorrow. There is a lot of hype surrounding it, so some people are afraid that there will be a crash if his big investment isn't "big enough".

[Anonymous No.4930324]

>>4930225
ANON im not gonna fuck with ya since youre new to biz and it could use some new people.
But always trust /biz/.
Sell now and buy at 9k its going to dip past 10k.
It unarguable.

[Anonymous No.4930358]

>>4930245
>mfw that IS what muhammad would say

the memes are real

[Anonymous No.4930418]

>>4930232
Irony: the post.

[Anonymous No.4930443]

>>4930277
thanks but i still don't get it

[Anonymous No.4930445]

>>4930245
Now now tyreese....

[Anonymous No.4930476]

>>4930443
you agree to sell/buy something in the future for a price agreed upon today

[Anonymous No.4930503]

>>4930443
https://www.investopedia.com/terms/f/futures.asp
watch the video then read the article

[Anonymous No.4930644]

>>4930443

Ok. You own 1 BTC which you paid $10K for.

Some dude believes the price of BTC will be $30K in a year, but you don't so he offers you $20K for it.

You agree and you give the BTC to the futures exchange and he gives the escrow to them to them.

In years time, you give him the BTC and get the $20K and if its more than that on the market, the dude get a profit, if its less, he eats the loss.

Its all speculation.

If you want to get more complicated in shorts...

If BTC is at $20K and some dude thinks its going to go to $10K, he barrows a BTC from some lender on the exchange for a fee, then sells it for $20K and holds on to the money.

Then in years time if its $10K he buys the BTC back and then gives the BTC back from the person he lent it to, and pockets the $10K difference. Unless its now $30K which he is now fucked (but margin call would have kicked in before that point and no one shorts more than short term but that's the concept).

[Anonymous No.4930728]

So, it's just a legal form of gambling?

[Anonymous No.4930736]

>>4930476
>>4930503
>>4930644
wtf why do i still not get it what am i missing?!?!????

[Anonymous No.4930770]

>>4930736
https://www.youtube.com/watch?v=6_QHMyhS6gk

[Anonymous No.4930798]

>>4930770
but how does this apply to bit coin?

[Anonymous No.4930814]

>>4930728

Yes, but its still better odds than a casino.

Which here is the gambling odds in order form best to worst:

Tresuries
Bonds
Stockmarket
Options
Futures
FOREX
Casino

Honestly, I'd put HODLing cryptos between futures and stock market as you actually still own the coins where options is all theoretical ownership.

[Anonymous No.4930958]

one of the better threads on BIZ

[Anonymous No.4931071]

On a futures exchange, can you literally specify any future date and price when you make the contract?

And when you initiate the contract there has to be someone with the opposite position as you intiating a contract with the same date and price right? Swear to fucking god I hate derivatives.

[Anonymous No.4931116]

>>4931071

I never traded in futures as I think its about as bad as trading on margin on stocks except now you are trading margin on futures....

But generally the exchange puts limits on this from what I read and its not like BitFinex with no commisions or with eTrade with $6 commisions.

You are looking at maybe $50 commission and limtis of say $10K worth of an order plus margin requirements.

Futures can't be played by poor fags.

So either rich fags or institutional investors.

I'd be more interested in options.

[Anonymous No.4931181]

>>4931071

Which I add... Its not that futures will bring more normie poor fags with their pay checks in but rather institutional traders with the big wallets in.

So in theory it will put more money into system.

But it also lets the institutional investors short with large sums of money.

[Anonymous No.4931197]

FUCK UP SOME COMMAS and buy the dip

[Anonymous No.4931219]

>>4930225
ive never died so hard

[Anonymous No.4931324]

>>4930736
It's useful for people selling things that they haven't made yet, like crops.

Imagine if I want to be a farmer, so I have to buy a farm. But I'm worried that the price of crops will go down and I won't make any profit after I grow my crops.

What I could do is go find an investor who's willing to bet that the price of crops will actually go UP while I'm growing them. Then I agree to sell my crops to him at a future date, after I've finished growing them. That way I don't have to worry about the price of crops crashing and I can grow my crops in peace. However, I could miss out on profit if the price of crops does go up. The investor on the other hand is willing to worry about the risk of crops going down but if the price of crops goes up, he will make the extra money.

[Anonymous No.4931366]

>>4931324
thanks pajeet but im not a farmer im talking about the crypto future thought that was obvious

[Anonymous No.4931526]

>>4931366

You are aware that majority of farmland in America is owned by millionaire mega farms.

People made shit tons of money betting on Soy in 2016 because of Chinese demand.

No farmer with 1 acre has enough crops to put on a futures exchange.

[Anonymous No.4931584]

>>4931366

>gets half a dozen examples to clarify
>still doesn't get it

I can't handle your participation level coupled with the fact that 99% of cryptos are red right now

[Anonymous No.4931617]

>>4931526
not helping soy boy
>>4931584
just don't click on it then you don't have to read 4chan you know

[Anonymous No.4931634]

>>4930277
No they didn't. They got the idea from Japanese rice framers.

[Anonymous No.4931653]

>>4930644

This is how they'll get it to a 500K/1ml/2ml you name it. soon you'll see futures for absurd prices that WILL be filled. It's all coming together so nicely.

[Anonymous No.4931715]

>>4930277
Quality post, thx fine anon

[Anonymous No.4931826]

>>4931366
You could use it to hedge transactions in bitcoin.

Say I want to pay my rent in bitcoin, my landlord knows he will get x btc in one months time. Instead of being fucked if x btc is worth way less in a month, we can agree that I pay him x btc one month from now, since he can sell x btc in futures (for a fee). Now, no matter what, one month from now he gets in dollars what x btc is worth today, and whoever bought the futures from the landlord gets the actual bitcoin.

In theory futures could make e-commerce with bitcoin way more viable. In practice some big hedge funds are going to try and short the market. Either btc will crash or there will be a short squeeze and prices will go to the moon.

[Anonymous No.4931888]

>>4931826
I believe this too. Short it, let many people panic sell and buy as cheap as they can. Rinse and repeat. I’ve got a whole .75 bitcoin and will hold this baby til btc hits 50k, because it will and beyond.

[Anonymous No.4932132]

>>4931888
trips of truth but i don't know what anyone else in this thread is talking about.
can't someone just lay it out?!

[Anonymous No.4932181]

>>4930245

[Anonymous No.4932224]

SO DO I HAVE TO MAKE AN ACCOUNT WITH CME


I WANT TO SHORT THIS SHIT TO HELL

FUCK BTC


I ONLY OWN .02 butcoin btw

[Anonymous No.4932222]

here you go OP

an actual answer for your education

https://www.investopedia.com/terms/d/derivative.asp

[Anonymous No.4932293]

>>4930285
kek

[Anonymous No.4932325]

>>4931634
This, so much this.

First futures markets was rice markets in Japan.

Same place Candlestick charts were born.

[Anonymous No.4932387]

>>4930225
I have a Bachelor's in Finance so I'm probably better qualified to explain this shit than like 90% of the people here.

I'm going to try and explain it in a way that a 5 year old could understand.

> The Explanation:

> You have a lot of money riding on something > (Could be gold, copper, corn, bitcoin whatever)
> If prices drop you lose all your money
> This worries you
> Say you have 1 Bitcoin
> The price on the market now is $10000 (This is for explanations sake)
> You're worried it could go tits up and you lose everything
> You agree to sell the Bitcoin to Mister X a year from now for $11000
> This is binding so once it's locked in, its locked in
> This means that if bitcoin is selling on the market for $20k one year from now you still have to sell him that bitcoin for $11k
> On the other hand if bitcoin is selling for $5k, Mister X still has to buy that bitcoin from you for $11k

This is the basic idea behind a future. You're locking in what price you are going to sell/buy something at in the future (Hence the word future).

Finally there is a difference between European and American futures but that's getting into advanced territory

[Anonymous No.4932416]

>>4932387
ooh explain contango next thanks

[Anonymous No.4932419]

>>4931634
Afraid you're wrong mate. Futures go back to farmers in medieval Europe and potentially before even that.

[Anonymous No.4932434]

>>4932387
Interedesting, the one future ive seen about to launch says it settles once a month.

[Anonymous No.4932452]

>>4932416
That'd be difficult to explain in 5 year old terms.

[Anonymous No.4932471]

>>4932452
please i need it

[Anonymous No.4932482]

>>4932452
ok maybe just explain the difference between "futures price" and "futures spot price" because I honestly do not undestand

[Anonymous No.4932701]

>>4932387
what the fuck did i just read
SIMPLY plesae

[Anonymous No.4932747]

>>4932434
Yeah so this is where the theoretical seperates from the practical.

Here's the explanation:
> European futures still behave more or less like what I explained
> American futures do not
> Americans are worried that you or Mister X might default (I'm going to assume you know what default means)
> The whole point of a future is to make shit more certain and less risky
> This is bad, especially so for futures
> Americans deal with this by settling the account (in this case monthly)

This is really hard to explain in a 5 year old way so I'll just tell you why they do it.
> Futures make shit safer
> If you default a future isn't safe
> Defaulting is completely unacceptable on a future
> It needs to be locked the fuck in
> Like if a meteor was about to hit you'd still pay $11k for that bitcoin
> Because of this Americans made it impossible to default on a future
> They do this by settling the account (covering the difference)
> This is usually done daily but in your case monthly
> If you or Mister X can't cover the difference the future is closed
> This is known as the maintenance margin
> If difference is too large you get a margin call
> You can either exit the future or deposit funds

Essentially, the whole reason American futures are settled at regular time intervals is so you don't default.

[Anonymous No.4932791]

>>4932747
now i get it thanks
the diagram made it clicke

[Anonymous No.4932835]

>>4932701
Let me explain it in a way you can understand.

> Me grow corn
> Me sell 1 corn in far off long time
> Price corn now much good
> Price corn far off long time perhaps no good
> I shake hands with Ooga Booga
> He buy 1 corn for 5 cows in far off long time
> Me happy
> Even if market go bad in far off long time
> Me still sell 1 corn for 5 cows
> Me no have to worry

[Anonymous No.4932846]

>>4930225
Bitcoin crash :^)

[Anonymous No.4932857]

>>4932835
Who the fuck trades 1 corn for 5 cows are you retarded

[Anonymous No.4932867]

>>4932835
lol ok ok u got me but what if he doesnt pay up

[Anonymous No.4932893]

>>4932387
Thanks man, well explained!

[Anonymous No.4932927]

>>4932867
what happens to your credit when you don't pay your bills?

[Anonymous No.4932955]

>>4932927
im no dadbeat u bitch u
know what im gettin tired of this discussion
>DELETE THREAD

[Anonymous No.4932997]

>>4932482
So the basic idea behind a future is what I explained but it's a lot more complicated in the real world.

This is because Finance types like to make things a lot more complicated than it needs to be.

Here's the explanation:
> Futures price is what you pay to enter into a future (e.g. $5 per corn)
> Spot price is the market price

Alright so know to make it easy I'm going to really boil it down.

>You agree to pay $6 per corn in 1 year
>Corn is expected to only be worth $5 per corn in 1 year
>This is Contango
> The opposite is backwardation

It is so much more complex than this but that's it at the core.

[Anonymous No.4933005]

>>4932997
>so it really is bitcorn, cool...

[CLOSE No.4933023]

>CLOSE
>>4932997
>>4933005
stop posting here.
>CLOSE

[Anonymous No.4933041]

>>4932867
It is literally impossible to default in an American future.

Here's why:
> Bank checks to see if you have enough money to pay
> Every. Single. Day
> One day you don't have enough money
> Bank gives you ultimatum
> Put more money in or exit the contract

If you are in an American future to the end it is literally completely impossible for you not to get paid up at the end.

[Anonymous No.4933118]

>>4933041
thanks this video helped me get it it's about crypto futures
https://www.youtube.com/watch?v=3r3zMWE9ur4

[Anonymous No.4933216]

All of these explanations and yet not ONE decent real explanation on Bitcoin futures.

They said no jews from Kike Street will actually buy Bitcoin. They said it will be cash only. How the fuck............does this work?

I know jews scheme in inhumane ways - but how the fuck do they trade Bitcoin futures and "put pressure on Bitcoin price" without buying actual Bitcoin to pump and dump?

I used the word pump and dump not because I'm a /biztard but because every stock exchange is a speculative pump and dump, only the "established stock markets" are pnd's for people who sacrifice enough to enter the premises and play there, whereas crypto is low barrier of entry p'n'd aka for the goys.

[Anonymous No.4933249]

>>4933216
let me shake up your little world view for a sec
i, the creator of this entire thread, have been a jew all along
suck it goyboy

[Anonymous No.4933415]

>>4933216
I actually am Jewish. If you want to become involved in this industry you might want to change your views or at least pretend to. Finance and banking are dominated by Jews in every sense of the word.

Also if you haven't understood any of the extremely boiled down explanations I've given then you really shouldn't invest or pursue finance. Maybe a career as a secretary?

I'm not trolling either, finance is a hyper-masculine, kill or be killed industry except in this game it's survival of the smartest. Educate yourself or you WILL be taken advantage of.

[Anonymous No.4933430]

>>4933249
>have been a jew

Your grasp of history is wrong, Pharisee/Khazar faggot.

[Anonymous No.4933908]

>>4932997
thanks I still dont quite understand contango desu

p.s. I am also jewish

[Anonymous No.4933939]

>>4933908
I guess the main issue I am having is where does the "expected future spot" come from

why is the "forward price" not trading exactly at "expected future spot"

looking at bitcoin tomorrow, the "forward price" will be whatever the futures market is trading at right
so where the hell does "expected future spot" come from

[Anonymous No.4934518]

>>4933939
Yeah I'm not going to lie to you, this area of finance is like the mental Olympics. If you want to understand it fully you need to grind and grind until it's second nature.

Here's the explanation:
> Spot price is essentially market price
> Say spot price of bitcoin is $10k
>Means bitcoin can be bought/sold right now for $10k
> The "expected future spot" is exactly what it sounds like
> The expected market price of bitcoin in the future
>Take a look at the graph I posted earlier
> This spot price changes over time

Why?
> These change with the supply and demand of the underlying asset
> Say America goes to war with North Korea
> The spot price of weapons goes up
> Because of the extra demand

This means two things:
>Contango = Bullish market
> Means the market as a whole expects bitcoin prices to rise
> Backwardation = Bearish market
> Means the market as a whole expects bitcoin prices to fall

There is only one reason you would pay more for 1 BTC in the future than what you could buy it for today.

It's because you expect that the spot (market) price of BTC will go above the futures price at some point before the future matures.

Here's an example:
> Market price for BTC is $10k per
> You enter a futures contract for 10 BTC at $12k each in one year
> Market goes wild, BTC rises to $50k on the market
>In one year you pay $120k for something worth $500k

So you're probably thinking, why not just buy the bitcoin on the market and sell them off in a year then?

Because American futures mitigate risk and are settled usually daily (but it seems in your case monthly).

> Each month they'll check both parties have enough $ to honor their agreement
> If you don't you need to put more $ in or leave the futures contract
> Each month you get the chance to leave the futures contract

[Anonymous No.4934550]

>>4934518
i see i see

so the real issue is that "expected future spot" its kind of nebulous and not really coming from anywhere specific...

[Anonymous No.4934677]

>>4934550
but as the expiration date gets closer and closer the expected spot price becomes less nebulous

so the futures contract has to move to reflect the more accurate expectation

this is from investopedia
>For example, assume an investor is long one futures contract, which expires in six months, on a commodity experiencing contango at a price of $19, when the commodity is currently trading at $12. Assume six months have passed and the futures contract fell to $17 and the spot price increased to $14.

what I am still not understanding is why after 6 months in this example the futures contract only fell to 17 instead of 14. The expiration date has arrived, why would anyone buy this future contract that expires at the end of the day today for 17? its highly unlikely we are going to see the price go above 17 before the day ends. why is that futures contract trading higher than the spot?

[Anonymous No.4934771]

>>4932997
I've read backwardretardation for some reason, maybe because I tough is was looking at a retarded chart. I guess the reason why is:
>This is because Finance types like to make things a lot more complicated than it needs to be.

[Anonymous No.4934845]

>>4934677
>why is that futures contract trading higher than the spot?
because somebody a year ago overvalued the future of the underlying commodity

[Anonymous No.4934956]

>>4934677
You're a lot smarter than I anticipated, this is quite high level financial stuff I'm surprised you understood it so quickly.

I checked the Investopedia example and it is right but poorly explained.

>Investor invests in a future called F1 at $19
> At maturity spot price = $14
> F1 = $14 at maturity
> The new futures contract called F2 costs $17

They're two seperate futures contracts. Same maturity and still in contango but less so than before.

[Anonymous No.4934986]

>>4934956
im just trying to figure out whats going to happen with bitcoin tomorrow man

thanks for the explanations

How are the futures being handled for bitcoin, do you know? like what is the expiration time on the contracts? there will probably be a whole slew of possibilities right? 1 week futures, 1 year futures etc...?

[Anonymous No.4935002]

>>4934845
They did overvalue it but the futures price will ALWAYS equal spot price at maturity.

The $17 price is the cost of a new 6 month future.

[Anonymous No.4935005]

>>4934986
I have never traded futures (or options) before so im really not sure what exists out there

[Anonymous No.4935022]

>>4933415
You didn't address his point. In "bitcoin futures" nobody will actually buy bitcoin. So how does it work?

[Anonymous No.4935161]

>>4934986
It'd be a lot easier to explain if you provided me with a link to the website.

Futures can literally be offered in whatever time period you want. There are 1 month, 1 year, 5 years etc.

Basically applying futures to BTC is a smart idea.

> BTC is extremely volatile
> Futures mitigate risk and volatility
> Perfect combo

I'm not too involved with cryptocurrencies but if you really want to go this route I'd purse Options instead which are far superior.

An option is exactly the same as a future only it's optional. An option to buy and option to sell. You get the idea.

> You buy a call option (an option to buy something) for $5
> This call option entitles you to buy 1 BTC at $15k in six months
> Say BTC is trading at $13k currently
> In 6 months you can choose to exercise your option or not
>6 months pass and BTC is trading at $14k
> You eat the loss of $5 and don't exercise the option

Now say the opposite is true:
>6 months pass and BTC is trading at $16k
>You exercise the option and sell off the bitcoin for a $995 profit

This is the beauty of options, you stand to lose very little and gain a lot.

[Anonymous No.4935176]

>>4935022
hmm

I mean theoretically when we talk about the futures market in oil for example
there are actually companies that want to buy physical oil and they will buy and hold a futures contract to maturity with the intent of actually buying the oil right?

but lets say the guy who sold that contract doesnt actually have oil, hes just some trader who wanted to bet on price going down. now the maturity date has arrived and the price hasnt gone down so this guy is looking at a loss right. He has to buy the oil and... send it to the company that has the contract? it gets kind of cloudy when physical goods are involved im really not sure about the logistics hmm. probably more likely the company can buy its own oil at the current market price, but it has made profits from the futures contract increasing in value so that when you factor that in to their transaction they are really only paying the contract price...

pulled all of that out of my ass though

[Anonymous No.4935218]

>>4935161
yeah there are no options being offered on bitcoin yet
only futures

I really havent looked into the website of CBOE or whatever to find details
I was not really planning on trading the futures
I just wanted to be able to better predict how it will affect the actual bitcoin market

[Anonymous No.4935300]

Stop feeding the mutt

[Anonymous No.4935364]

[Anonymous No.4935386]

>>4935022
In Medieval times, futures were used by farmers to lock in prices for their crops in case there was a disaster or shit market when harvest came around.

This isn't the case anymore. Futures have become a financial vehicle unto themselves.

You get to invest with less money and less risk but you never own the underlying asset.

[Anonymous No.4935398]

>>4934956
>>4934677
>>4934518
>>4933415
>>4933216
Basic finance. Spoon-feeding lazy normies. The name bitcoin future is self describing "bitcoin futures" kyselves all of you

[Anonymous No.4935431]

>>4935218
Derivatives are bets on an assets price, it's basically no different than for example:

>'Hey man I'll give you $5 if the price of BTC goes up!'
>'You got it bud, I'll give you $5 if it goes down'

It's more complex than this in reality but at it's core that's what it is

[Anonymous No.4935484]

>>4931888
>>4932222

[Anonymous No.4935486]

>>4932857
WE WUZ KANGZ

[Anonymous No.4935496]

>>4935484
>id wtf