Futures Investment Theory

2. Futures speculation

(1) Futures speculative trading

Futures speculative trading refers to the futures trading in the futures market for the purpose of obtaining spread income. Speculators make the decision to buy or sell according to their own judgment on the futures price trend. If this judgment is the same as the market price trend, the speculators can obtain speculative profits after closing out their positions; If the judgment is contrary to the price trend, the speculator will bear the speculative loss after closing out. Because the purpose of speculation is to earn profit from price difference, speculators generally just close their positions and settle their futures contracts, rather than carry out physical delivery. There are two types of speculative transactions: spread speculation and arbitrage.

The so-called spread speculation refers to an activity in which speculators buy or sell the original futures contract when they think the price is rising or falling, and then sell or buy the original futures contract when the opportunity is favorable, in order to obtain profits, through the expectation of the price. The key to price difference speculation lies in the accuracy of the analysis and prediction of the price change trend of the futures market. Because there are many factors that affect the price change of the futures market, especially opportunistic factors such as speculative psychology, which are difficult to predict, it is difficult to make a correct judgment, so this kind of investment is risky. Arbitrage trading is a special way of futures speculative trading. It uses the relative price difference between different months, markets and commodities in the futures market to buy and sell different types of futures contracts at the same time to gain profits. Just as the spot price of a commodity is often different from the futures price, the contract price changes of the same commodity in different delivery months are also different; The price changes of the same commodity in different futures exchanges are also different. Due to the existence of these price differences, arbitrage trading in the futures market is possible.

Arbitrage trading enriches and develops the content of futures speculative trading, and makes futures speculation not only limited to changes in the absolute price level of futures contracts, but also more focused on changes in the relative price level of futures contracts. Arbitrage trading has positive significance for the stable development of the futures market. Specifically, the role of arbitrage is mainly manifested in two aspects: on the one hand, arbitrage provides opportunities for risk hedging; On the other hand, arbitrage helps to form a reasonable price level.