Outright Futures Position

An outright futures position is a futures contract that is not hedged with an offsetting position in another futures contract or with an option. Outright futures positions are typically used by speculators who are looking to profit from changes in the price of the underlying asset.

There are two types of outright futures positions: long and short. A long position is created when a trader buys a futures contract. A short position is created when a trader sells a futures contract.

The profit or loss on an outright futures position is determined by the difference between the price at which the contract is bought or sold and the price at which it is closed out. If the price of the underlying asset increases, a long position will make a profit, and a short position will lose money. Conversely, if the price of the underlying asset decreases, a long position will lose money, and a short position will make a profit.

Outright futures positions can be used to speculate on the future direction of the price of an underlying asset. However, they can also be used to hedge against the risk of price changes. For example, a farmer who is concerned about the future price of corn may buy a futures contract to lock in a price for their crop.

Outright futures positions are typically used by experienced traders who have a good understanding of the risks involved. They can be a profitable way to trade, but they can also be very risky.