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Re: A contract is only a contract when...



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Ira and all who know,

I guess the term contract has an entirely different meaning in the futures
markets than the definition I use. I'd have sworn they were binding in the
real world - not in futures? Apparently, all contracts are created equal -
but some are more equal than others! Now that I think about it, I guess that
is the real world. How could I be so naive? I do have three questions
though: If a floor trader who is a member is short 1000's of contracts from
10-40, and silver is at 50 and rising, what happened to all the margin calls
that I assumed would have to be met? Is that another erroneous assumption on
my part? Also, why would a floor trader hang on to such a losing position?

Still stumped,

Dennis C.
dconn@xxxxxxxxx
-----Original Message-----
From: Ira <ist@xxxxxx>
To: dconn@xxxxxxxxx <dconn@xxxxxxxxx>
Cc: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Monday, March 01, 1999 19:05
Subject: Re: beans, etc.


>The simple reason is that futures are created and the ones that create them
are
>the members of the exchange, the floor traders.  Now if you were a member
and
>short 1000's of silver contracts at between 10 and 40 and silver is trading
at
>50+ and everyone is still buying. What do you do if you run the exchange?
You
>say Ha, Ha, I just changed the rules,  I don't have to go out and buy the
silver
>at 50 because I don't have to deliver it and the only place you can go to
sell
>your futures is to the exchange and here I am waiting.  By the way, you
have to
>sell them at what I am willing to pay.  Ira