Futures contract price formula
As a futures trader, it is critical to understand exactly what your potential risk and reward will be in monetary terms on any given trade. Use our Futures Calculator to quickly establish your potential profit or loss on a futures trade. This easy-to-use tool can be used to help you figure out what you could potentially make or lose on a trade or determine where to place a protective stop-loss order/limit order to capture your profit. We know that futures prices aren’t coincide with spot prices before the expiration of a contract. This discrepancy is due to the basis . The theoretical value is trying to estimate the magnitude of the basis by taking into consideration all the factors (i.e. storage cost, interest rates and more) that make the price of a contract to be different from the spot price.