| Type of strategy |
Description |
| Hedging the portfolio of equities from price reduction |
Investors, who hold equity portfolios which make the basis for a futures contract, are to make sales contracts on the futures (sell the futures) in order to avoid losses from equity price reduction. As a result the losses at the stock market will be covered by the profit at the FORTS market. |
| Hedging funds flow from equity prices rise |
Organisations, which plan to invest their cash funds in the equity market, are able to insure themselves from equity prices rise by buying a futures contract. |
| "Short" sales |
Equity futures enable the participants to go short even in case of stockless portfolio. |
| "Leverage" game of rising /dropping stock prices |
Equity futures may be very attractive instruments for the game of rise or drop of stock. Investors who count on the rise of stock may make a contract for buying. As the futures contract allows to pay in only part of the basic asset (15-20%), the derivatives market requires less funds than the equity market. |
| Purchase/sale of short-term "synthetic" obligations (repo operations) |
With the help of the combination of operations – buying the equities and selling the futures contract – the market participants can create a position, which is similar to the purchase of "synthetic" short-term obligations, with the maturity before execution of the futures contract. This operation is similar to the operation of "reverse repo", when the participant trusts his cash funds on the security of the stocks. On the other part, the investors with equity portfolios can obtain a short-term loan with the futures contracts by selling the stock and buying the futures. The period of the loan is the date of maturity of the futures. This operation is similar to the "straight repo", when the participant loans on the security of his stocks. |
| Calendar spread |
Having in circulation several futures contracts with different execution dates enables playing with widening and narrowing the spreads of prices between them. Initial margin benefits are provided with forming a calendar spread on many equity futures. |
| Forming different strategies with the futures and options on futures |
With the help of futures and options on futures combinations, strategies with various risk/earnings yield relations can be formed. |
