Understanding 'Unadjusted Futures Price'
Considered as a cornerstone phrase in the realm of option trading with cryptocurrencies, "Unadjusted Futures Price" is vital to grasp for every digital options trader. Essentially, an Unadjusted Futures Price refers to the current price of a futures contract without any adjustments done for dividends, interest, or any sort of time factor.
Decoding 'Unadjusted Futures Price'
The term 'Unadjusted Futures Price' often crops up in trading discussions, specifically around futures contracts with cryptocurrency. For the uninitiated, a futures contract is an agreement to buy or sell an asset (like a cryptocurrency) at a predetermined price at a specific time in the future.
So, whence comes the 'Unadjusted' part? The key thing to note here is that futures prices can be adjusted for several factors such as dividends or interest rates. When we take into account these factors, we get the 'Adjusted Futures Price'. On the other hand, if we do not consider these aspects, we get the 'Unadjusted Futures Price'. This is simply the market price of the futures contract as it stands on the present day and time, free from any adjustments.
Why 'Unadjusted Futures Price' Matters
Knowing the 'Unadjusted Futures Price' is of high essence to cryptocurrency options traders. It serves as a strategic reference point to assess the present worth of their futures contracts. This can enlighten them about potential profits or losses.
Also, understanding the Unadjusted Futures Price can provide traders some insights into the underlying volatility of a cryptocurrency. By comparing it with the Adjusted Futures Price, they can get a gist of how factors like dividends or interest rates are influencing the futures contract price.
Example of 'Unadjusted Futures Price'
Let's say, for example, you own futures in Bitcoin that are set to mature in one month. The current market price of these futures is $40,000. This is the Unadjusted Futures Price because no adjustments have occurred for dividends or interest rates.
In ConclusionUnderstanding the 'Unadjusted Futures Price' throws a floodlight on the present-day value of a futures contract, while also giving traders a deeper understanding of the cryptocurrency market dynamics. Keep an eye out for this indicator as you navigate the exciting world of crypto options trading.
