Futures Contracts Calculator
Futures contracts are volatile, but can be a useful addition to an investment portfolio. This Futures Contracts Calculator tells you how many shares you should buy to reflect a certain level of risk in your investment portfolio, depending on you the cost of the shares and how much you have to invest. The results provided by this calculator are only intended to show how much of your portfolio would be at risk with a certain investment approach. You should also evaluate the risk and likely performance of specific investments and consult with an investment advisor before investing in this particular type of financial product.
Financial Calculators from
Investment and equity inputs:
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Total Risk on Trade
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Choose your trading plan depending on your acceptable degree of risk.
Combined value of cash, money market instruments, and open trading positions.
Price per contract
This is the cost per contract. Tells you what is 'at stake' initially (per contract) on a specific trade recommendation.
Futures Contracts Calculator Overview
There are a lot of investment products that you can add to your investment portfolio. If you are interested in a fairly safe investment then you can look at bonds; more aggressive or long-term borrowers will likely seek to invest in stocks.
Futures contracts are a type of high-risk investment that offer the potential for big gains, but can result in big losses as well. As such, it's recommended that borrowers who invest in them limit them to a small slice of their overall portfolio – 5 percent of one's overall portfolio in futures is a fairly aggressive position. You could multiply your money quickly, but you could just as quickly lose that 5 percent.
A futures contract is a commitment to buy or sell something at a specific price at a certain date in the future. You make or lose money depending on whether the market price for that stock, commodity or other financial asset on that day is higher or lower that the price you agreed to pay.
One of the things that make futures contracts highly volatile is that you do not have to put up the full value of the market contract to control it. Buyers typically put up only a fraction of the contract price, often 5-10 percent, which is called buying on margin. This can allow you to make a lot of money on a small investment if prices move in a favorable direction.
However, if at any time the price of the contracted item moves in an unfavorable direction that exceeds the margin you posted, you are subject to a margin call and you lose your investment unless you put up more money to maintain your position.
Futures contracts are not the same thing as option contracts. The holder of futures contracts have an obligation to sell or buy, whereas an options contract gives the holder the option of buying or selling at their discretion.
It is important to remember that all investments involve risk, and futures contracts are riskier then a lot of other investment products. Before you invest in futures contracts it is important to review these products with an investment professional.
Using the Futures Contracts Calculator
If you've decided you want to add futures contracts to your portfolio, the Future Contracts Calculator will tell you how many to buy, based on the price, your tolerance for risk and the size of your portfolio.
Your trading plan is how much of your portfolio you wish to expose to risk by investing in futures contracts – 5 percent is a pretty aggressive position, considering you could easily lose the whole investment.
Your account equity is the size of your portfolio, the entire amount you presently have invested or available for investing, a portion of which you wish to invest in futures contracts.
The price per contract is how much you must post to control a single contract share – if you are buying on margin, it will be a percentage of the actual contract price itself. So if the contract price is $100 and you are buying on a 10 percent margin, your price per contract would be $10.
Once you enter your information, the calculator will automatically indicate how many contracts to buy.
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