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Futures and Options

What are Futures and Options?

Futures is a standardized contract between two parties obligating them to buy or sell a pre-determined quantity of specific underlying asset of pre-determined features at a pre-determined price in a certain maturity. This underlying assets are generally commodity/goods (agricultural products, energy products, metals), equities, stock indices, interest rates, precious metals (Ounce & Gram Gold), foreign exchanges and/or parity.

Option Contracts is an agreement concluded between two parties which gives option buyer the right, but not the obligation, to buy or sell the asset or financial indicator, at a certain price, until a certain date (or at a certain date) and in return of a certain amount (premium) paid by the buyer. If the option buyer uses its option right arising from the agreement, then the option seller will be obligated to buy or sell the asset or the financial indicator at the agreed price to the option buyer that uses its right.

Futures and Option contracts are traded on Borsa Istanbul Derivatives Market (VIOP) which is an organized market operated by Borsa Istanbul A.Ş.

Features and Advantages

  • Futures and option contracts are traded in secondary market, Borsa Istanbul A.Ş. Derivatives Market (VIOP).
  • Futures transactions are executed through Session room, HSBC Internet Banking and Mobile Banking application; whereas, Option contracts can only be executed through Session Room.
  • To be able to execute Futures and Options transactions, it is necessary to open an account and through HSBC Yatırım Menkul Değerler A.Ş. The prerequisite for opening an account with HSBC Yatırım Menkul Değerler A.Ş. is to have an account with HSBC Bank A.Ş.
  • Futures and Option Contracts are served at the HSBC Bank A.Ş.'s international service quality with HSBC Securities’ expert support.

Why invest in Future and Options?

6 Things you need to know

With Futures and Options, you may execute a trade in the opposite direction of your position in the commodity, foreign currency or financial product you have in the spot market. By this way, you can protect yourself against price changes that may occur in the spot market.

In the Futures and Options market, investors have the opportunity to take a higher position with smaller amounts. However, the leverage effect, in addition to the possibility of higher return compared to the spot market also carries a higher risk of loss.

Single stock futures and option contracts can be traded during the day time of 09:30-18:10 whereas other derivatives can be traded between 09:30-18:15. Additionally, futures on indices, USD/ounce gold and silver can also be traded in the evening session (19:00-23:00). Thus, it is possible to take and change positions even in the evening when other markets are closed.

In the transactions carried out in the futures and option market, the counterparty role (buyer versus seller, seller versus buyer) is undertaken by Takasbank. Takasbank guarantees the completion of transactions.

Turkish Lira collaterals held at Takasbank benefit from the accumulation of interest by Takasbank Fund Management.

Futures and Options require less initial investment than traditional investment instruments. By depositing a small amount of collateral, the entire return (or loss) of the relevant vehicle is obtained. Long and short positions enable clients to invest in the expectations of both decreasing and rising prices. The definition of Long/Short positions are given under the “Frequently Asked Questions” section.

What do we offer?

Customers who have an investment account in HSBC Yatırım Menkul Değerler A.Ş. and fulfilled the Premier criteria, are able to execute the Futures and Options transactions. Major underlying assets are Equities, Stock Indices, Foreign Exchange and/or Parities, Pure Gold and Pure Silver. Futures and Options contracts that are tradable through your HSBC Securities account are listed below according to their underlying assets above.

  • Index Futures and Option Contracts
  • FX Futures and Option Contracts
  • Single Stock Futures and Option Contracts
  • Gold Futures and USD/Ounce Gold Futures
  • USD/Ounce Silver Futures Contracts
  • USD/Ounce Platinum Futures Contracts
  • USD/Ounce Palladium Futures Contracts

From which channels can you trade?

Futures and Option trading orders may be given through HSBC Bank A.Ş. Session Room, HSBC Internet Banking and Mobile Banking application.

Futures and Option Session Information

Session Hours
Pre Normal Session 07:30
Continuous Auction 09:30
End of Normal Session 18:15
Settlement Price Publication ≈18:45
End of Day ≈18:46
Pre Evening Session 18:50
Evening Session Cont. Auction 19:00
End of Evening Session 23:00
End of Day for Evening Session 23:15
Broadcast Evening Session 23:30
Session Transactions
  • Between 09:30 and 18:15, through HSBC Yatırım Menkul Değerler A.Ş.; you may execute your futures transactions based on equity indices, foreign currencies, gold, silver and single stocks whilst, you may only execute your option transactions based on equity indices, foreign currencies and single stocks.
  • With the Evening Session starting at 19:00, you may only execute Index Futures Contracts (BIST 30, BIST Liquid Bank and BIST Liquid 10 Ex Banks), USD/Ounce Gold and Silver until 23:00.
Futures Order Types

Futures and Option Order Types?

  • Limit Order: It is the order type in which price and quantity are inputted. It is used to execute transactions up to the specified limit price level. The remaining part of the order passively waits in order of price and time priority.
  • Market to Limit Order: It is the order type which are entered only by specifying the quantity without the price. It matches only with the best priced order in the market. The part that is not realized as a transaction becomes a limit order based on the last trade price and is written as passive order in the order book (If the remaining is inserted as Fill and Kill, the remaining orders are not written as passive order).
  • Stop Order: It is the type of order which gets activated when the market reaches the price determined by the ordering party for the relevant contract or trades at a higher price in the market in the case of buying orders or at a lower price in the case of selling orders. It is mandatory to specify the activation price for stop orders.
Validity Period of Orders
  • Day Order: This is an order validity type where the order stays at the order book until the end of the day. In case of no match until the end of the day, the order will be deleted. In case of partial match, remaining unmatched quantity is kept in the order book until the end of the day and if there are any remaining quantity at the end of the day it will be deleted by the system.
  • Fill and Kill (FaK): This is an order validity type where the whole order in case of no match, or the remaining quantity in case of partial match is deleted automatically and not kept passive at the order book, at the instance of which the order is placed. (Will not be in effect at start up)
  • Good till Cancel: The order is valid until it is cancelled. Good till cancel orders are valid until the maturity of the contract and will be automatically cancelled by the system at the end of maturity, unless cancelled, or matched.
  • Good till Date: Orders that remain valid in the system within the scope of price margins and price ticks, until processed or cancelled by specifying the deadline for validity.
  • Fill or Kill: It is an active order type subject to the condition of execution in full. If this condition is not met as soon as the order is entered, the order is cancelled.

Frequently Asked Questions

What is the long and short position in Futures and Option?

  • The long position on Futures describes buying. The long party is the one that has the obligation to buy the underlying property. An investor who has taken a long position will benefit if the prices increase.
  • The short position on Future describes selling. The short party is the one who has the obligation to deliver the underlying. An investor who has taken a short position will benefit if the prices drop.
  • The long position on Option describes buying the option contract. In the organized option markets, the risk of the long position holder is limited to the premium paid initially.
  • The short position on Option describes selling the option contract. In the organized option markets, the holder of the short position is obliged to buy or sell until the expiry date or on the expiry date, so collateral is requested from the holder of the short position. For the short position holder, the risk can be unlimited.

How to close a position in the Futures and Option market?

Reverse transaction is to trade in the opposite direction to the currently held position. For example, if you have ten long positions in a contract, if you sell 10 contracts or less in the same value date of the same contract, your selling transaction is a "reverse transaction" or a "position closing transaction". In other words, a reverse trade is a buy versus a sell, a sell versus a buy trade.

How are the contracts settled on the expiry date?

In the Futures and Option market, settlement is made as physical delivery or cash settlement on the expiry date. Physical delivery means that the underlying asset gets transacted, changes hands and is being received. Cash settlement means the amount equal to the difference between the contract price and the settlement price on the value date exchanges hands between the parties. The underlying asset does not get traded. Physical delivery in futures and option contracts only takes place in single stock futures contracts. Cash settlement is used in all other contracts.

What is the settlement date in Futures and Option?

Futures and Option transactions’ settlement date is T+1. For the contracts which are subject to physical delivery, settlement date is the second business day following the trading day (T+2).

What is a Margin Call?

The collateral is requested to be raised back to its’ initial level, if the investor makes a loss after taking a position and the amount of collateral in the account drops to the level of maintenance margin or below. This is called “Margin Call”. Accounts with a margin call from the previous day may avoid risky situations by making a risk-reducing transaction or depositing cash collateral.

What is Maintenance Margin?

After a transaction is made, a loss may occur as a result of the change in the contract price. In case of loss, the collateral balance decreases. Maintenance margin indicates the lowest level at which the collateral can fall as a result of the loss and is usually set as a certain amount of the initial level. When the margin account balance falls to the maintenance margin level or below, the balance is requested to be raised back to the initial margin level.

How often profit and losses gets calculated?

In futures and option contracts, profits and losses are calculated daily according to the settlement price. Profit or loss amount is reflected daily in the collateral accounts.