Stock futures, similar to put options, allow you to sell a
quantity of stock at a fixed price to another investor regardless of market fluctuations.
Stock futures allow investors precise calculations on their profits or losses
in the future and give them a heads-up on where to adjust their portfolios.
However, stock futures have their own disadvantages. With a
fixed number of stocks and prices, the market fluctuation’s gain cannot
increase the price of the stocks. Any investor’s short or long order could mean
greater losses for their portfolio, and even if predicted, could go beyond the
loss threshold they set.
Dealing in stock futures have been a common investor trade practice
and the two or more parties are legally bound to fulfil their responsibilities.
It is also a way for forecasters to know the trends in the market, especially
the level of investor confidence in different markets.
Most systematic investors make use of stock futures since
many want to increase the predictability and assess risk levels instead of
increasing their profits. Stock futures are a good way to stabilize portfolios
during a market slump.
If you do not wish to invest in stock futures, it is highly
important that you read or know about the futures forecasts because they could
guide you about the risks involved in the industries you’re willing to partake.
