Professional Trader Level II - Swing Trading & Market Making

Expiration dates vary, but are clearly specified by the exchange for each option traded. Futures Contract: A transferable and legally binding agreement whereby the seller agrees to deliver and the buyer agrees to accept delivery of a standardized amount and quality of a commodity at a specified location during a designated time period.

The obligation created by the sale or purchase of a futures contract can generally be fulfilled in two ways. A seller (short position) can offset the obligation by taking the opposite position (a buy) on the same futures contract, or deliver the commodity per the agreement.

A buyer (long position) can offset the obligation by taking the opposite position (a sell) on the same futures contract, or accept delivery of the commodity per the agreement. Some futures contracts are specified as cash settled, meaning delivery is not allowed and open positions must be settled with money (based upon some designated cash price) rather than delivery of the physical commodity.

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