Chapter 01 · Section 1.1

Cash Flow - Forwards

                         Forwards               Futures

Contract Terms           variable               standard
Delivery                 expected               only 2-5%
Trading                  via phone              centralised
Margins                  negotiated             uniform
Credit Risk                taken by             clearing
                           counterparty         house
Liquidity                lesser                 greater
Cash Flow                ........               ........

In forwards, you receive your profits (or pay for your losses):

• a) on delivery.
  Yes. Profits are not received and losses are not paid until the transaction is completed on delivery or offset by a complementary transaction. However in the case of huge price moves the counterpart will demand a guarantee. Continue
  b) as soon as prices change.