Long Futures


Buy Futures

Margin Requirement

Yes, variable margin required as market moves lower


  • Futures price risk is eliminated (unlimited protection to higher price levels)
  • No premium expense, only transaction costs
  • Flexible, offset at any time


  • Lower futures price does not improve buying price
  • Capital expense of potential margin exposure

When to Apply

  • If futures price level fits into budget or operating margin (no flexibility is needed to participate in lower prices)
  • If price outlook is bullish
  • Lack of liquidity in option market to execute a flexible price strategy

Potential Adjustment

  • In a rising market, replace long futures position with a long call option or call spread as market sentiment becomes less bullish
  • In a falling market, protect long futures position by buying a put option or put spread to help reduce purchase price level set by futures