Futures vs Forwards: Cost Implications
Both futures and forwards offer a mechanism to manage risk and investment exposure in the commodity markets. The structure of these two types of markets is subtly different, and these differences can have implications for the relative cost of trading and investing in these products. This paper examines the implications for the cost of trading in the markets for futures and forwards in metals, using the copper market as the example case.
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
