Limit potential losses associated with futures trading

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1. Establishing a spread position with futures contracts gives the investor a means to limit potential losses associated with futures trading.

2. Futures contract short seller can only gain money from her position if the futures price declines over time.

3. The current income received on a long futures position is generally positive, but small in comparison to the capital gain/loss of the contract itself.

4. The profits earned by a futures contract seller exactly equal the losses earned by a futures contract buyer, and vice versa.

Reference no: EM132036978

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