How does derivatives trading work at Eurex?
There are two different types of futures exchange contracts: One is called options and the others futures. Both are standardized in all features such as contract size, size of the smallest price movement or delivery date and therefore always have a fixed term. Liquid futures trading would not be possible without the specification.
Futures products offer you options for cost-effective hedging, additional returns and stand-alone speculation, clever ways of using them to optimize earnings or maximize returns.
An example: A coffee producer wants to buy 100 tons of coffee by December to meet its fourth-quarter production needs. However, the coffee roaster is concerned that coffee prices will increase by the end of the year. To hedge against a possible price increase, the manufacturer decides to buy coffee futures. His advantage: If the coffee prices rise, he has to buy his coffee more expensive in the fall. However, since the price of his coffee futures would go up with the rise in coffee prices, he would make a profit that could compensate for his higher purchase price. Disadvantage: When the coffee price falls, the coffee producer benefits from lower purchase prices, but his coffee future makes a loss, which also compensates for the lower purchase price. All in all, futures trading offers the futures trader the opportunity to fix a certain price level for a certain period of time.
Important: Look out for cheap fees when trading. at finanzen.net zero1, a so-called Neobroker, you can trade 180,000 securities without order costs. You also pay no custody or account management fees.