Bob,
Hans is right. Your conception of how the futures markets work is
entirely wrong.
> Many don't even have the financial capacity to do so;
>
> I would say the opposite. Most pork belly futures contract owners do
> have the financial capability to take delivery.
I said many not most. Certainly when I traded futures I never had
the capacity to take delivery. [Major players do have the finacial
capacity but it is so seldom done that it is unlikely you would be
able to find a broker who knows how to do it.]
> Say a single contract is worth USD 100,000. And the owner put
> down 5% to buy it. Where did the other USD 95,000 come from? The
> broker loaned it to the owner.
Bob, this is utterly false. Nothing of the sort takes place.
>> Presumably, it's planned that 99% or so of the people who trade
>>in pork bellies never will "redeem" a contract for them, but as
>>long as about 1% of the players CAN,
>
>Jim, it doesn't work like that. The brokers aim for 100% of players
>that *CAN* take delivery of the underlying security. Try opening
>an account for buying any type of futures contract. Then you'll see.
Jim was right. You should try opening a commodities account yourself
and learn something about the futures markets!
> >it doesn't matter at all, and all contracts tend to settle
> >*without* most owners ever having to worry about what to
> >do with an unexpected truckload of bacon --
>
>So are you saying that when the bacon futures contract settles,
>it's life ends,
That is exactly what happens.
> the underlying security (the bacon) went pueff?
For most futures contracts there never was any underlying security.
Best,
CCS
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