Options & futuresIntermediate

Futures and leverage

Study notional exposure, collateral, mark-to-market losses and the effects of replacing an expiring futures contract. Examples separate a small deposit from the much larger exposure it supports.

Free self-study · reading course3 lessonsAbout 8 min reading

What you will learn

  • Calculate contract notional and price-move exposure.
  • Distinguish collateral requirements from maximum loss.
  • Explain curve shape and imperfect hedging relationships.

Before you begin

Know the difference between a cash balance and an economic exposure, and be comfortable multiplying contract units.

Full lesson list

All lessons are freely available. No enrollment or payment is required.

  1. Contract notional and exposure

    • Use contract units rather than the deposit to measure exposure.
    • Distinguish a futures price from a spot quotation.
    About 2 min reading
  2. Collateral and mark-to-market losses

    • Track cash collateral separately from notional exposure.
    • Recognize margin calls and losses beyond an initial deposit.
    About 3 min reading
  3. Curve shape and basis risk

    • Separate curve shape from a forecast of spot direction.
    • Recognize why a related contract is not a perfect hedge.
    About 3 min reading