Silver futures

 

Both in today’s modern world and historically, commodities have been basic building blocks of the economy. What are commodities? Keeping things simple, commodities are raw materials that are used everyday for daily uses.

When commodity trading is mentioned, silver is one of the first things to come to mind. In the list of “soft commodities”, silver is one of the most popular precious metals to trade in today’s world.

This commodity’s low correlation with other commodities and its pricing related to flat currencies during the recent financial crisis are all building blocks to that a very important conclusion: silver is considered a currency in the Forex market and is traded in a similar way to other currency pairs. The difference however between other currencies and silver is that silver can only be traded in terms of USD.

 

Why Silver Futures

Hedgers, including manufacturers and consumers often use silver future contracts to hedge against price movements and to reduce price risk.

The second categories of traders who trade silver futures are speculators. According to their speculation of silver prices they buy or sell silver futures.

One of the biggest advantages of trading silver futures is the high level of leverage that comes with the contracts. With a higher level of leverage, speculators experience potentially higher return on investment with futures contracts.

Moreover, greater transparency, financial integrity and flexibility are offered by futures contacts. This is due to the fact that they are all traded at centralized exchanges globally.

 

How does a silver futures contract work?

Silver futures contracts are standardized according to quality, quantity, and delivery location and time trough a futures exchange

The basics of silver futures trading include the two positions traders can take; long and short. A short position in futures contracts obligates the trader to deliver a specified amount of silver. And reversely, a long position is an obligation to received silver in the amount specified in the contract. However, the most common strategy for trading futures is when a trader sells the same contracts they had bought, or vice versa, before the expiry date of the contract. Speculators often use this strategy based on their speculations, and open short/long positions accordingly.

 

To trade silver futures successfully, PCM International offers not only the best futures trading platform, but also all the tools and information needed for educated and intelligent trading.

 

Silver futures

Trading Symbol

Contract Size

Quality Specification

Trading Months

Last Trading Day

New Contract Listing

Price Quote

Tick Size

Price Movement Limit

Max Open Position Limit

Max Order Size

Trading Days

Trading Hours

Wholesale Trades

DS

1,000 troy ounces.

Min 0.999 purity, as per Dubai Good Delivery Standard

Mar, Jul, Sep and Dec

Third last Business Day of the month falling immediately before the Delivery Month

Business Day immediately following Last Trading Day of Expiring Contract

US$ quoted in Cents per troy ounce

US$ 0.005 (US $ 5 per contract)

US$ quoted in Cents - 50 Cents - Note 1*

As determined and specified by the Exchange

200 contracts

Monday through to Friday

07:00 - 23:30 Hours Dubai time (GMT+4)

EFS, EFP, Block trade facilities available

Note 1*: If price breaches the daily price movement limit, trading in particular contract shall continue, with the new trading price range without any cooling period

Initial Margin based on SPAN

Calendar Spread Position Margin

Extra Margin

Delivery Period Margin

$900 per contract

Depending upon each class of asset, spread position margin (Calendar spread margin) is charged using SPAN framework. In case of Silver, 100% benefit is offered on calendar spread position

In case of additional volatility, an Extra Margin as deemed fit by the Exchange; may be imposed on all open positions

Five (5) times of the Initial Margins.

Delivery Unit

Deliverable Weight

Deliverable Quality

Approved CMI / Assayers

Approved Refiners

Approved Vaults

Delivery Period

First Notice Day

Last Notice Day

Delivery Process

Vault charges

Delivery Instrument

Option for Cash Settlement

Silver Cash Settlement Price

30 Kg

30 Kilograms cast in one bar of 1,000 troy ounces (10% more or less)

Minimum 0.999 fineness - Note 2*

Names as listed on the DGCX website

Names as listed on the DGCX website

Names as listed on the DGCX website

First through Fifth Delivery Day of the Delivery Month

Business Day immediately preceding First Delivery Day

Business Day immediately preceding Fifth Delivery Day

The Matching of Buyers and Sellers for Gold delivery will be completed on a time priority basis upon receipt of their Tender/ Delivery Notices

Rates applicable as published on the DGCX website

Dubai Gold Receipt (i.e. Standard DGR along with validated Refiner's certificate or CMI-Certified DGR only)

Open Positions that have not been closed out on the Last Day of Trading are subject to cash settlement as per Silver cash settlement rice declared by the Exchange

The Final Silver cash settlement price for Silver Futures at the Close on the Last Day of Trading shall be the settlement price as made public by COMEX for the delivery month which corresponds to the applicable DGCX Delivery Month

Note 2*: If Silver of higher fineness is delivered, no premium shall be paid.