Futures trading example
Say it’s July and you think the price of oil is going to rise in the future – you could open a long position on a September oil future. Your profit is determined by how much the price of oil has risen by the future’s expiry, and the size of your position – less any relevant charges (eg our spread).
Alternatively, if you think that the price of oil is going to fall, you could go short on the oil future. In this example, you’d profit based on how much the oil price fell and the size of your position (less the amount of relevant costs and charges).
In both scenarios, your position would be closed automatically in September – but you could close it before by the last trading day.1 The months for a futures contract will vary – the example given here (which uses September) is for explanatory purposes only. You should check the expiry of a futures contract before you open a position.
