Re: RFC : Correcting some problems in rounding/number handling

[Richard Wackerbarth]

On Fri, 07 Jul 2000, Jon Trowbridge wrote:

> Well, for what it is worth, holding shares in Red Hat means that you
> *own* a (probably very small) percentage of Red Hat, and your rights
> and obligations flow from that ownership.
>
> If you hold futures contracts, you own *nothing*.  Instead, you are
> legally bound to perform a specific action at a specific time.  Now
> after you perform that action, you might be the proud owner of, say,
> 1000 barrels of crude oil.

I disagree. You own the beans and are required to accept delivery and make 
payment upon that delivery.

That is no different than my RedHat stock. If I "buy" today, I am actually 
contracting to take delivery on next Thursday.

> If you offset your futures position before the delivery date, you are
> freed of that legal obligation.

And similarly for the stock.

> Ah, but you never had to surrender anything, now did you?

Yes. At a minimum, I surrendered the right to place my "margin" in another 
investment. Therefore I can argue that it is a part of the contract and the 
interest earned thereon is a part of the investment return.

At the other extreme, I can argue that you have "invested" the total amount 
that you have "at risk", namely the delivery price, and financed most of that 
amount just as you would in the margin purchase of a security.

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