Newly Listed Futures Contracts
On December 16, 2024, 2 contracts were newly listed: NGX30M5 and NGXPENSIONM5.
Below are details of the contracts with sample scenarios.
Code: NGX30M5
Listing price: 3966.25
Expiration date: June 20, 2025
If a speculative trade, bought one contract NGX30M5 in December 2024, at the listing price of 3966.25, with an initial margin of 6% and using a contract multiplier of 1000, the initial margin requirement for one contract would be calculated as follows:
Initial Margin = Listing Price ×Multiplier × Initial Margin Percentage
Initial Margin = (3966.25 × 1000) × 0.06 = ₦237,975
Now, if the trader held the contract until the expiration date (June 2025) when it closed at 4,300.25, the profit/ loss calculation would be as follows:
Profit = (Closing Price minus Listing Price) × Multiplier x number of contracts
Profit = (4300.25-3966.25) × 1000 x 1= ₦334,000
So, in this scenario, the speculative trader would have made a profit of ₦334,000 on one NGX30M5 Index Futures contract with an initial margin outlay of ₦237,975 representing 40.35% ROI between December and June. This example reflects the gearing effect of derivatives, but it is also worth noting that this gearing can also multiply potential loss.
________________________________________________________________________________________________
Code: NGXPENSIONM5
Listing price: 4,641.75
Expiration date: June 20, 2025
If a speculative trader who, bought one contract of NGXPENSIONM5 in December 2024, at the listing price of 4,641.75, with an initial margin of 6% and using a contract multiplier of 1000, the initial margin requirement for one contract would be calculated as follows:
Initial Margin = Listing Price ×Multiplier × Initial Margin Percentage
Initial Margin = (4,641.75 × 1000) × 0.06 = ₦278,505
Now, if the trader held the contract until the expiration date (June 2025) when it closed at 4,950.25, the profit/ loss calculation would be as follows:
Profit = (Closing Price minus Listing Price) × Multiplier x number of contracts
Profit = (4950.25 – 4,641.75) × 1000 x 1= ₦308,500
So, in this scenario, the speculative trader would have made a profit of ₦308,500 on one NGXPENSIONM5 Index Futures contract with an initial margin outlay of ₦278,505 representing 10.77% ROI between December and June. This example reflects the gearing effect of derivatives, but it is also worth noting that this gearing can also multiply potential losses.
