Futures contracts: what are they and what is the difference?

Futures contracts work as  purchase and sale negotiation between two investors, based on the future price of an asset. Thus, the logic for obtaining returns is the same as that of the stock market. That is, buy a contract for a lower price and sell at a profit. 

Let’s assume, for example, that an investor trades the future dollar. As the value of the dollar goes up, that person gains the value of his contract and makes money, being able to hold the position until the agreed date or sell early to take advantage of current earnings. 

As we said, operations in the futures market do not require the disbursement of money when purchasing assets. The investor can leverage, guaranteeing only the required guarantee margin (money that may be invested in other investments, such as direct treasury or even stock market shares). 

An important feature in the negotiation of futures contracts is the date corresponding to the contract’s maturity. In this sense, there may be several contracts related to an index, currency or future commodity, depending on the date. 

This information is expressed in the contract’s acronym. The two digits refer to the maturity year and the final letter corresponds to the month, according to the table below:

Month Code
January F
February G
March H
April J
May K
June M
July N
August Q
September U
October V
November X
December Z

What is the difference between futures and mini contracts?

As you can see, futures and mini contracts are two derivative contracts available in the futures market. Their operation is basically the same, the main difference being related to the minimum investment volume made. 

In general, transactions in futures contracts start from a minimum lot of 5 contracts of the chosen asset. This can make investment impossible for many people, as even the guarantee margin is high under these conditions. 

In the case of mini contracts, contract negotiation takes place from 20% of the full contract value and the minimum lot is only a mini contract. Therefore, they are much more accessible for small investors who want to obtain returns operating in the futures market.

Advantages and risks

Trading futures and mini contracts can be a very interesting choice for those looking to earn greater profits. Especially considering the possibilities of leverage, since these options allow you to operate with a much higher value than what you actually have. 

In addition, another advantage of investing in the future market is the use of highly liquid assets – such as the Ibovespa index and the dollar. This feature makes operations more dynamic and offers greater ease for investors to make their purchases and sales.

However, it is important to note that, when operating in the futures market, the investor will be taking greater risks. After all, just as leverage can drive gains, it can also increase losses.

Therefore, it is essential that the investor has knowledge of this market before making its operations. With proper preparation, it will be much easier to obtain good results in your operations in futures and mini contracts.

Conclusion

Futures and mini contracts are two derivative modalities available for future market operations. Generally, those who negotiate standard futures contracts are large investors, producers and companies. After all, the amount invested is high. Meanwhile, investors who want to know this market and take advantage of the opportunities available in the future market environment and do not have such high capital for operations tend to opt for mini contracts.

If well known and exploited correctly, the futures market can offer investors numerous opportunities. And futures and mini contracts are the main players in this scenario.However, it is important to reinforce, once again, that these investments involve greater risks. Therefore, the investor needs to be well informed and know in detail how the market works, its characteristics, advantages and risks – as you did in today’s article.

Now that you know details about futures and mini contracts, you are better prepared to assess the opportunities in this market and seek good returns. 

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