100-Ounce Silver Futures - Product Overview
What is the 100-Ounce Silver futures contract?
The 100-Ounce Silver futures contract is a compact product that offers plenty of potential, representing an approachable way to trade the silver market. The contract is designed to give traders more precise and flexible control over their portfolios while offering a highly accessible entry point to the market.
With silver prices demonstrating high volatility in recent years, this contract is perfect for market participants seeking to maximize their trading leverage with less capital. The 100-Ounce Silver futures contract provides precise market exposure by closely tracking the spot price of silver.
Trading example
To illustrate 100-Ounce Silver futures’ capital efficiency, consider this trading example:
If Silver futures are trading at around $50 per troy ounce, someone wanting to express a bullish view can purchase a 100-Ounce Silver futures contract. The notional value of this contract is 100 x $50.00 = $5,000.
This can be done with roughly $250 of initial margin. This $5,000 position is 20 times greater than the margin requirement, illustrating significant capital efficiency.
Trading a similar position with ETFs involves purchasing approximately 90 shares of a silver ETF. There are typically less capital efficiencies when trading ETFs.
The position is the same size at $5,000, but the upfront capital required to purchase 90 shares of the silver ETF is vastly more, at approximately $5,000 (based on an estimated price of $56 per share). This lack of leverage is what makes futures trading a more capital-efficient alternative to ETFs
Understanding the pricing and settlement of 100-Ounce Silver futures
The 100-Ounce Silver futures contract is financially settled, measured in units of 100 troy ounces and priced in U.S. dollars and cents per troy ounce. The minimum price movement, or tick size, is set at $0.005 per ounce, resulting in a $1.00 change in the contract value per tick. This contract is traded on Globex and can be listed for any March, May, July, September and December in the nearest 24-month period.
The 100-Ounce Silver futures contract is block trade eligible starting at 25 contracts or more.
Benefits of 100-Ounce Silver futures
- Follow spot price closely: Gain more precise market exposure, as this contract closely follows the spot price, allowing for accurate tracking of silver's price.
- Flexibility to react to market moves: Enables market participants to instantly act on market moves, taking either long or short positions.
- Seamless trade execution: Manage positions quickly and efficiently, as this contract allows you to leverage the proven liquidity of Silver (SI) and Micro Silver (SIL) futures.