A Price Agreed for Next Season’s Rice - forwards, futures, hedging and margin

The board’s FUTURE box says “water next season at a price fixed today; both sides MUST go through”. This lesson is that box: who wants such a promise, why both sides are held to it, and the money that moves every night to make sure they are.

Before you start. From Under a Buttonwood Tree - the exchange, the order book and the spread you need the exchange: one place where buyers and sellers of the same thing meet, through an order book. From The Bank That Bought the Safest Thing - bond prices, yield and duration you need the lesson the bank learned too late: a price that moves while you are waiting can sink you, even when the thing you hold is sound.