Post by lakeenterprise on Jul 4, 2022 20:38:45 GMT
We all know that future contracts is coming sooner or later to the game. In the Future Dev. section of the library describes it more as a long term enforced contract, but I think that it should be more similar to the actual real world futures contracts: futures.
To sum up futures, it is essentially a contract that allows one party to purchase a certain amount of goods, such as wheat, from a seller at a certain price. In the real world the would provide security to the producer, and for the buyer it would provide a guarantee of price. Also the buyer of a the future contract would pay a certain amount of cash based on the amount of the commodity and the price of it, this would be called a premium and used to value the future. The principle behind futures for both SC and the real world is the same. Except in the real world such futures can be traded.
I propose that when we implement a function where people can trade futures with each other.
For example:
I would sign a future with a q3 fuselage suppliers, they would sell me 1000 q3 fuselages at 2700 (strike price) in a week (July 11th 2022). I would first pay the supplier a 5% premium for selling me this contract, because they are carrying more risk. So I would get 135k deducted from my balance, thus the future currently is worth $135k. If, for some reason, the next day q3 fuses go up to 2900, then my future would go up in value to a max of $335k, since (2900-2700) x 1000= $200k profit.
So if someone else is willing to take the risk, and buy my future in anticipation that the price would remain the same for the next 6 days, they would pay me somewhere from $135k and $335k. If they choose to buy my future for $235k, I make $100k in profit.
Likewise, if, for some reason, fuse crashes and goes down to 2500, then I would lose 135k, because now my future for 1k fuse at a strike price of 2700 is worthless. And if after another 6 days fuse prices stay at 2500, I have to swallow down a $200k loss plus the $135k non-refundable premium that i paid the supplier. Thus I lose $335k.
Some people have pointed out that futures would cause small players to lose money, so there should be both a CV minimum and a level minimum, any players under level 20 or under 30mil CV can not trade futures.
Just to be clear, there is no premium for futures in the real world, there is premium for options. But for the sake of the SC economy we had to add in premiums.
Keep in mind, normally futures would be at a price slightly higher than current mp, so if the price doesn't move, then the buyer of the future loses money (in addition to the premium). If the strike price is at a +2% of mp, plus a 5% premium, then the price of the commodity would have to go up 7-10% (depending on the average contract pricing) just for the buyer of a future to BREAK EVEN. So there is no such "free money" in futures, the risk and reward must be weighed carefully by both parties before negotiating a future.
Edit: Please excuse my bad spelling
To sum up futures, it is essentially a contract that allows one party to purchase a certain amount of goods, such as wheat, from a seller at a certain price. In the real world the would provide security to the producer, and for the buyer it would provide a guarantee of price. Also the buyer of a the future contract would pay a certain amount of cash based on the amount of the commodity and the price of it, this would be called a premium and used to value the future. The principle behind futures for both SC and the real world is the same. Except in the real world such futures can be traded.
I propose that when we implement a function where people can trade futures with each other.
For example:
I would sign a future with a q3 fuselage suppliers, they would sell me 1000 q3 fuselages at 2700 (strike price) in a week (July 11th 2022). I would first pay the supplier a 5% premium for selling me this contract, because they are carrying more risk. So I would get 135k deducted from my balance, thus the future currently is worth $135k. If, for some reason, the next day q3 fuses go up to 2900, then my future would go up in value to a max of $335k, since (2900-2700) x 1000= $200k profit.
So if someone else is willing to take the risk, and buy my future in anticipation that the price would remain the same for the next 6 days, they would pay me somewhere from $135k and $335k. If they choose to buy my future for $235k, I make $100k in profit.
Likewise, if, for some reason, fuse crashes and goes down to 2500, then I would lose 135k, because now my future for 1k fuse at a strike price of 2700 is worthless. And if after another 6 days fuse prices stay at 2500, I have to swallow down a $200k loss plus the $135k non-refundable premium that i paid the supplier. Thus I lose $335k.
Some people have pointed out that futures would cause small players to lose money, so there should be both a CV minimum and a level minimum, any players under level 20 or under 30mil CV can not trade futures.
Just to be clear, there is no premium for futures in the real world, there is premium for options. But for the sake of the SC economy we had to add in premiums.
Keep in mind, normally futures would be at a price slightly higher than current mp, so if the price doesn't move, then the buyer of the future loses money (in addition to the premium). If the strike price is at a +2% of mp, plus a 5% premium, then the price of the commodity would have to go up 7-10% (depending on the average contract pricing) just for the buyer of a future to BREAK EVEN. So there is no such "free money" in futures, the risk and reward must be weighed carefully by both parties before negotiating a future.
Edit: Please excuse my bad spelling