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Old 11-27-2007, 10:50 AM
john kane john kane is offline
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Join Date: Dec 2004
Posts: 2,829
Default Re: BFI November [censored] thread

basic question:

stock/commodity XXX. current price $1000. i want to invest/long.

futures (?) price is $1020 for FEB08. if at februay 08, it is then $1020, have i made any money?

is it a case of being told a price and you decide whether it will be higher or lower?

take gold for example. price $815. FEB08 price $825. i can roll the daily price, whereby i am effectively investing (with leverage, at a 7% annual cost). Or i can go for the FEB08 option.

but if gold was at $825 in FEB08, using the rolling daily method i make profit on the $10 rise, whereas on the futures method i havent made anything?

is that correct?

many thanks if you can help.
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