transaction in which a purchase and sale contract is made by setting a price at the present time on the condition that a product be delivered at a certain time in the future is called futures trading. Usually, stocks are famous for futures trading, but in fact, commodities traded through futures are very diverse, including raw materials 해선 ( oil , metals , agricultural products , etc.), stocks , and foreign exchange .
It is one of the three most basic derivative products (plain vanilla). Plain vanilla refers to a derivative product that has a simple transaction structure and is easy to combine with other financial instruments, such as swaps , options , and futures. Futures trading, along with the other two, created numerous derivatives and turned financial markets into a mess. Warren Buffett even described it as “a weapon of mass destruction in the financial markets.”
Futures were relatively less well-known to the public than stocks, but awareness rose in Korea as news broke that SK Chairman Chey Tae -won suffered a loss of 100 billion won through futures investment. # Squid gameCho Sang- woo , a character in <<> , became known when he participated in a squid game due to a failure to invest in futures.[2]
It is a complete zero-sum game, and it is highly gambling because it can utilize high leverage. Because of the structure of high-risk high-return, successful people can become landlords owning a few buildings in a relatively short period of time, while they can become ruined in an instant and go beyond the bitter taste of life. In the huge futures market, there are limits to individual information and trading skills, so most of them end up going to the latter. For this reason, in the stock or financial community, futures, especially overseas raw material futures, are taboo to the extent that the adage 'suggest derivatives to your enemies ' was coined.
This is a cartoon with a rough description of the gift .
2. History[edit]
The world's first futures trading was at the time of the tulip bubble in the Netherlands in 1637, when the demand for tulip bulbs soared compared to the supply. A more formalized futures trade is Dojima , Osaka
in 1710.[3] It was the first time that rice was started as a basic asset in the rice market. In the Western world, corn was first introduced as an underlying asset in the Chicago futures market in 1877, and futures with various commodities such as oil, stocks, index products, and bonds as underlying assets were developed in the 1970s. Futures trading is hedging trading depending on the trading purpose.[4] , speculative trading[5] , arbitrage[6] , spread tradingIt is divided into [7] . Stock futures trading in
Korea is conducted at the headquarters of the Korea Exchange .Looking at the gift business at [8][9] The futures trading volume of the Korean stock market ranks 3rd-5th in the world. In Asia, it is competing with Japan for first place. Surprisingly , China , Hong Kong , and Singapore have lower futures trading volume than Korea/Japan, but commodity futures are strong here, and stock index futures are strong in Korea and Japan. As Japan released Nikkei 225 mini futures and took the lead through the merger of Tokyo Stock Exchange and Osaka Stock Exchange , Korea also released KOSPI200 mini futures and decided to release individual stock futures and KOSDAQ150 futures in the KOSDAQ market within 2015 .
2.1. plowing[edit]
Field trading in rural areas is also a kind of gift. 'Treating the field' is also called field trading (圃田去來, buying and selling all crops grown in the field while still in the field), and means the cultivation of agricultural products under a contract to acquire the products under certain conditions.
Most farmers sigh that there is not much left even though the price of cabbage is skyrocketing. This is because there are many contract growers who transfer cabbage to fields.
Agricultural products, especially vegetables , are one of the products with a severe supply-demand imbalance. In general, unless there is a special variable, demand is constant, while supply tends to be jagged according to crop conditions. This is because the production volume is greatly affected by the weather, so it is not easy to adjust the production volume compared to industrial products produced in factories.
Moreover, it is not easy to control supply by price signals because the period from production to actual production and market release is long even after production is decided. For rice and fruits, even the storage period is long, so it is possible to adjust the timing of shipment, but in the case of vegetables, even this is not easy. Here, people's taste is not easily controlled, and since eating habits are closely related to culture and quality of life and take on the nature of essential goods, it is not easy to control demand by price.
As such, agricultural products with low price elasticity of demand and supply repeatedly skyrocket and plummet, adding to the worries of farmers and consumers. The collapse and soaring of agricultural products drastically reduces the predictability of farmers' economic life. Even if the price of cabbage rises right now and you choose to increase production and sow, you will not know the price a few months later when cabbage is actually produced and shipped.
The cabbage distribution structure that was created to avoid this uncertainty is the so-called 'farming' transaction. Cabbage, which has not yet grown, is handed over to the middle distribution merchant after paying the price calculated by calculating the average annual cabbage price based on the predicted production per pyeong. In actual rural areas, the price is paid by the area of the cabbage field, but the price calculation structure is based on the amount of cabbage produced.
What costs and benefits do farmers and middlemen who trade in fields exchange for? Farmers lose the cost of uncertainty and get a predictable, stable income. Of course, the farming went better than expected, and when the price of cabbage skyrocketed, the opportunity to make a huge profit was missed, but this is the essence of field trading that the middleman who took the risk of a collapse also takes the profitability. to be.[10]
The middleman secures goods by giving money in advance, and the farmer discounts uncertain future income to present certain income. As consumer dissatisfaction increased due to the skyrocketing price of cabbage, there are many articles criticizing the profiteering of middlemen who plow the fields, but from an economic point of view, it is unreasonable to brand the benefits of middlemen as profiteering. This is because future risks and opportunities are simultaneously exchanged along with future goods, rather than simply trading goods. Conversely, if the price of cabbage plummets, the middleman will bear most of the damage. #
An example of plowing. It is a contract between a farmer and a wholesaler based on cabbage prices.
Transaction Details: Contract on 12/1 to receive 100,000 won per head of cabbage on 12/31
Situation 1: On the day of 12/31, the market price of a head of cabbage is 50,000 won.
Situation 2: On the day of 12/31, the market price of a head of cabbage is 1,000,000 won
Above, the cabbage spot transaction is not transferred according to the spot market price, but as written in the futures price . In other words, the farmer receives 100,000 won per head and delivers the cabbage himself. In the case of Situation 1, the farmer can hedge (defend) a loss of 50,000 won per harvest, but the trader will have suffered a loss of 50,000 won per harvest, and in the case of Situation 2, the wholesaler You can receive a difference of 900,000 won per pack.
In conclusion, the farmer gives up the additional profit of 900,000 won when the price of cabbage reaches 1 million won and obtains the current stable income.
2.2. repetitive window and bead[edit]
Midu dumping dealt with in History Special
The first securities that started in Korea were futures using rice. Midu (米豆), which also appears in Chae Man-sik's Takryu, is a rice futures trade. There is a person named Won Hee-chang as a real person who prospered through the rice trade. After learning about the rice market as an employee at a rice matchmaker, he eventually accumulated a huge amount of money in 1920 alone, accumulating a huge wealth of 400,000 won (approximately 40 billion won in 2009).
Considering that his capital when he first entered the rice market in 1919 was about 500 won (approximately 50 million won as of 2009), it is truly an astounding rate of return (800 times). With this money, he built a large and beautiful house and married Kim Hu-dong, the most beautiful woman in Joseon at the time.
He would have been fine if he had shaken his hands when he reached the peak, but when the predictions for Mi-Doo continued to go wrong, he lost all his possessions in two years and swindled and went to prison. His wife, of course, asked for a divorce, and the big and click here beautiful house also belonged to him, of course. In the end, at the age of 30, he collapsed from a stroke, became paralyzed, and suffered from insanity, leading to a miserable life and passing away at the age of 40.[11]
The speculation of the repeat window is well timed. The summer of 1919 was the time when China's purchasing power temporarily exploded as silver bubbled, and an economic bubble began to blow in Japan to fill the demand. Japan had been in an uproar since rice riots arose due to speculation problems, but Japanese politicians at the time, including Prime Minister Hara, took advantage of the boom that blew after the Sino-Japanese War and the Russo-Japanese War , so they thought that winning the war would lead to a boom. The bubble of 1919 was not a bubble, but was misjudged as an economic boom that naturally occurred after the war.
You and I both exported because we made a lot of money just by exporting, and when demand rises, prices go up, so futures speculation became prevalent. This futures speculation, of course, is for the spot, such as rice, and coincides with the time when Heo Chang-chang jumped into the rice field. However, as this bubble lasted until the end of 1919 , the price index
skyrocketed by 33%, so this could hardly be called an economic boom . He persuaded Minister Korekiyo to raise the call rate to 8.03%.
Despite this action in November 1919, the bubble lasted over the year until February 1920, but in 1920 a major change in the silver content of all silver coins in England and France occurred.[12] After the devaluation, the price of silver plummeted.
And when the silver bubble, which had supported China's purchasing power so far, exploded, Chinese demand hit bottom, Japan's exports, which had been supported by China's demand, went down to the ground, and Japan's stock market, which had been supported by Japan's exports so far, collapsed. It tasted the aftermath of an unprecedented collapse, and the speculative market just exploded cleanly.
This so-called post-war bubble and its aftermath can also be indirectly known through the trend of the Japanese stock market at the time. It was a state of uneasiness that occurred several times over the course of time. The Tokyo stock index, which was 239 yen on March 1, 1919, closed at 549 yen on March 1, 1920, right before the bubble burst, but 349 yen on the 15th, 274 yen on April 14, and 217 yen on May 15. Not only was it cut in half, but the index fell further than before the bubble. Meanwhile, 21 banks went bankrupt.
In this chaos, how much can a speculator's skills, such as a repetitive spear, be magical, and can he be safe? In the first place, if we recall that the repetitive window learned the beauty market only through experience, the decline of the repetitive window in any form was inevitable. This is because the market is constantly changing, and Repeat Chang only relied on past experiences to play money.
3. Structure of futures[edit]
The structure of the gift itself is very simple. You are trading the possibility that the price will change in the future. Specifically, the obligation to buy or sell a specific asset at a predetermined price at a specific time is now traded in the form of a future, and the underlying asset subject to the future is traded in the future. As the English name suggests, trading by predicting future prices. The important point here is to reserve the transaction of the underlying asset, so even if the investment amount is less than the amount required for the underlying asset transaction, the transaction is established.
For example, Cheol-su lives near a famous bakery and Young-hee lives on the other side of town. Let's say Cheol-su decides to buy Young-hee 7 days later 10 cream buns worth 1,000 won each. Then, Cheol-su receives 10,000 won for the cream bread in advance.
If the bakery holds a 1+1 discount event 7 days later, Cheol-su buys the product using only half of the 5,000 won from the 10,000 won prepaid, buys it for Young-hee, and the remaining 5,000 won is entirely his share. In other words, Young-hee buys the product at a loss of 5,000 won.
However, let's say that 7 days later, the price rises so much that the price of bread rises from 1,000 won to 1,500 won. Cheol-su, who made the promise, has to buy cream bread unconditionally, so he has no choice but to spend 5,000 won of his own money to buy a cream bread for 15,000 won and give it to Young-hee. Then, Younghee bought the cream bread worth 15,000 won for 10,000 won and made a profit of 5,000 won.
Of course, in reality, if the price of bread goes down, Cheol-su will return the money as much as the price went down, and if the price of bread goes up, he will ask Young-hee for more money. Or you can just pretend you didn't have the promise and return the money and be done with it. But in financial transactions, promises are absolute, so these things are impossible.
Using the same metaphor for stocks, we can say that Bob simply buys bread with his own money, waits for the price to change, and then sells it again. Let's say Cheol-su originally had only 1,000 won. With that, he can only buy 1 Cream Bread. AndIgnoring the expiry date of cream bread7 days later, the cream bread has a 1+1 discount and is selling for 500 won per piece. If the price of cream bread reaches 1,500 won after 7 days, on the contrary, you can sell it and make a profit of 500 won. For Cheol-su, who has 1,000 won, he can afford a loss of 500 won, let alone a gain of 500 won. Furthermore, if Cheolsu doesn't want to sell bread because the price of bread is lower than 1,000 won, he can wait until the price of bread goes up unless he needs the money right away. However, as in the previous example, if the promise was made to buy a gift, that is, cream bread for Younghee, then Cheol-su, who had 1,000 won, would gain 5,000 won or lose 5,000 won, and the timing of the transaction could not be arbitrarily adjusted after setting it once. Even if he originally only had 1,000 won, he could do transactions worth 10,000 won, and it would be really nice to see a gain of 5,000 won as a result, but on the contrary, if he lost 5,000 won, it would be five times his original money, so he would not be able to afford it. This is why futures are riskier than stocks.
3.1. gifts and forwarding[edit]
Such a transaction has a problem in that even if the contract is stamped and promises are made with firm faith, if the loss increases, there is a sufficient possibility that the so-called money will fly away. Up to this point, it is not much different from forwarding (in transaction trading, where cargo is delivered after a certain period of time after the contract).
If I have to say the difference, forwards are usually traded only in the OTC market, and there is a risk of contract default in exchange for more flexible change of detailed conditions, but futures standardizes the assets to be traded and trades in the financial market, and a margin system and a daily settlement system are added. In return, the risk of contract default is institutionally prevented instead of being more formalized accordingly . The reason for establishing an over-the-counter central clearing house (CCP) is to prevent the risk of non-fulfillment of contracts unique to forwarding.
3.2. Physical delivery and cash delivery (cash payment)해외선물
There are cases in which liquidation is not completed until the expiration date after the initial trading of futures is concluded. At this time, the method of settlement of unliquidated positions at maturity is as follows.
Physical Settlement Physical Settlement: Futures that require direct delivery of collateral assets The physical delivery method refers to a method in which settlement is made by directly exchanging the actual amount corresponding to the final settlement price with the underlying asset at maturity. This is the maturity settlement method that applies to most futures contracts. The seller and the buyer take over and deliver the real thing through the warehouse designated by the exchange. Currently, among the products traded on the Korea Exchange, products settled by physical delivery include currency futures such as US dollar futures, Euro futures, yen futures, and RMB futures.
Cash Settlement Cash Settlement: Most of the futures, such as stock index futures and government bond futures, in which the difference is simply settled in money . For individual stock futures, both cash settlement and delivery settlement are possible. Instead, in the case of payment for acquisition, an agreement must be made in advance. In the case of the cash payment method, the amount of the transaction profit is exchanged in cash. Usually, cash is paid according to the difference between the product price at the time of contract and the product price at the time of final settlement. This method is mainly used for composite stock index futures where there is no object to deliver. When an institutional investor holding a large number of stocks wants to hedge against a decline in the value of their stocks, trading stock index futures would be cumbersome and costly if they had to deliver or take over stocks at the time of settlement. Accordingly, a cash payment method was devised. In other words, the cash payment method is a method that is applied to products that cannot be delivered, such as those whose trading assets are indexes such as KOSPI200, or products that require physical delivery, such as pork futures. The cash settlement method is a method in which cash of the same value as the real thing is received instead of delivering or taking over the real thing at the time of maturity for open contracts that have not been liquidated through cross trading until the final trading day.
3.3. Differences with Options[edit]
Options can be canceled unilaterally by the buyer, whether it is a call or put, but futures cannot be canceled arbitrarily.
Regardless of whether it is a put or call option, the seller's loss range and the buyer's profit range are unlimited, and the seller's profit range and the buyer's loss range are limited. With futures, both the seller and the buyer have unlimited losses and gains.
The common point between futures and options is that the loss of one side of the trade is exactly the profit of the other side. The fact that it is a zero- sum game applies to all derivatives, and futures and options are zero-sum games.
In addition, buying futures is buying a call option and selling a put option with the same strike price and volume, and selling futures is buying a put option and selling a call option with the same strike price and volume as the same. It can also be seen as a special form of transaction.