'Futures', and 'Options on Futures' are derivative instruments that are traded on recognised investment exchanges. They have a standardised contract size, set by the exchange, and the prices are derived from the current price of an underlying financial instrument. 

Futures contracts exist on many instruments including stock indices, commodities, currencies, bonds and interest rates. Unlike a CfD they have a fixed life span, though positions can be closed before the expiry date. They are margin products and can give an investor leveraged exposure to a range of asset classes with transparent pricing. Some futures contracts require the delivery or receipt of physical commodities - Kaupthing Singer & Friedlander will not allow clients to maintain positions until the delivery date.

They can be used for hedging or speculative purposes. An investor might sell futures on the FTSE100 or buy a put option to provide some protection for a UK equity portfolio against a market fall. An investor wishing to have exposure to the commodity markets might trade a gold or oil future rather than buy a metal or mining equity.  

As with all margin products an initial deposit is required to open a position in a futures contract and any subsequent losses will require further deposits to maintain the position.

More Information

To discuss how we can best meet your needs, please contact:

• Adam Zucker
  Head of High Net Worth Sales
  Tel: +44 (0) 20 3205 7537

Remember CfDs are a leveraged product that requires the deposit of a small percentage of the total trade value.  As the financial outcome is determined by price movements on the total trade value this can result in losses that exceed your initial deposit. Trading CfDs may not be suitable for everyone, so please ensure that you fully understand the risks involved and if necessary seek the advice of an Independent Financial Advisor.