{"id":26956,"date":"2022-12-30T08:18:00","date_gmt":"2022-12-30T08:18:00","guid":{"rendered":"https:\/\/businessyield.com\/?p=26956"},"modified":"2022-12-30T19:16:46","modified_gmt":"2022-12-30T19:16:46","slug":"pricing-of-futures","status":"publish","type":"post","link":"https:\/\/businessyield.com\/finance-accounting\/pricing-of-futures\/","title":{"rendered":"PRICING OF FUTURES: How to Price Future Contracts","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"

The pricing of futures contracts is the market price of a financial commodity. With the modification for interest, duration, and dividends paid out with a contract. This article is here to have a clear understanding of the pricing of futures and their contract.<\/p>

Pricing Futures<\/span><\/h2>

Futures are financial derivatives whose value is mostly determine by the price of the underlying equities or indices. However, the pricing is not as straightforward. There is still a price gap between the underlying asset in the cash and derivatives segments. We can explain this distinction by using two simple pricing models for futures contracts. These will enable you to forecast how the price of a stock futures or index futures contract will behave. They are as follows:<\/p>