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.
• b) as soon as prices change.
  No. in a forward contract, payment is made at the time of delivery. Gains or losses may not be collected (or paid) until that point. However this may be different when huge price moves occur.