Determining current futures prices
futures. This is a contract that guarantees you a share of a particular company
to be delivered to you not today, but sometime in the future, at a price that
is determined by the market right now. This price is usually called the futures
price of the stock (note – the term is plural – “futures”).
‘buy’ this futures, you don’t pay for the shares now. You are actually signing
a contract whereby you are committed to pay that price in a particular date in
the future, and you are guaranteed to receive one share of the company at that
time, irrespective of its actual market price at that future date. Suppose for
example that the futures price of the XYZ company is $40.
6-months futures contract. If six months later the share price is $45, you gain
$5 per share. If the market price in 6 months is only $35, then you lose $5.
Using the Yahoo Finance take a look at the five year chart
for Apple.INC. Using this chart and other information you can find on this
company, answer the following question:
What do you think would the futures price of 100 shares of Apple, INC company to be delivered to you in one year be right now?
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