Spook1304

Would you be able to provide the undated value and the underlying for that time? What underlying is it that the undated market tracks? From the platform, the closing price for the undated (at 4pm UK time on 10th Nov) was 797.7: Do I have the wrong prices/times or was there still a 15.05 point basis between undated and the Nov 23 future?

Thanks for the reply @KoketsoIG. My question is mainly around the convergence between the expiring future and the spot price. At the time, I was monitoring the Nov 23 London Gas Oil Future and spot price. At expiry, there was still a fair gap between the two instruments. Where-as all of the literature (both IG and otherwise) has said this should not be the case. Unfortunately I am unable to confirm what the future price was at the time as it is no longer on the platform. Can you confirm 2 things for me: 1 - Do the spot and future markets converge upon the future's expiry (are they the same price when the futures contract expires)? 2 - Can you provide the settlement price for the Nov 23 London Gas Oil Future Contract AND the spot price at that time? My expectation is that these should be the same value (or very close). Thanks again for the reply.

So the future expired and there was still a large gap between the Spot price and the expired future. This goes against what IG say on their site (below) and what @KoketsoIG mentioned above. The Spot market doesn't seem to track the futures price as it should. On the expiration of a future it should be equal to the spot price. I've emailed the helpdesk asking for an explanation and exactly what the Spot market tracks as the spot and future (which should converge) don't seem to be tracking/calculating as the IG website suggests (and every other source on futures as posted above). Any input from the community/IG is welcome.

Didn’t work out mate. Futures markets are meant to expire at the price of the spot market (or vice versa) according to every source everywhere including IG but after testing and getting in touch with their helpdesk to confirm, they said that the undated contract doesn’t do this so there is no guarantee the undated and future contract will be the same price when it expires. They’ve yet to specify what exactly the undated contract tracks as the whole point of the futures market is to guarantee a price in the future which is settled at the cash price of the instrument on expiry which doesn’t happen here on IG (despite their literature showing otherwise). Unless someone from IG wants to explain exactly what the undated contract tracks? For now you can just assume it’s some arbitrary instrument. Getting bucket shop vibes

From trading page it shows how the future will be settled which is based on the "Official closing price of the ICE Gas Oil Future on the last dealing day". Im curious to what the spot is will do when this is settled as everything I've read shows that these two prices should be the same on expiry so the spot should move to meet this or there should be some kind of adjustment to one of the instruments. Can anyone from IG or the community advise what the expected course of action is here?

Anyone assist with the question above? EG, There is a future due to expire tomorrow - London Heating Oil. The cash price is sitting at 811 and the future price is at 846 a 35 point gap. Is the expectation that the price will close that gap by 1630 tomorrow? From everything I've read from IG and other sources, the expiration price should converge with the spot price (or vice versa) and they should both be the same but a 35 point gap seems pretty large. Should I expect this gap to close or will it expire with a gap then be settled up afterwards? Thanks

Thanks for the reply @KoketsoIG. I'm colleting overnight interest on my cash position and want to ensure that the future and cash values will indeed converge with each other on 17th Nov so the price for both should be the same. This means i should keep the interest payments I've been getting daily and also profit from the gap between the CASH and Future contracts as everything I've read says that on expiry, the cash and futures contracts should be the same price. So for my example: SELL Cash - 3634 BUY Future (DEC23 - Expires 17th Nov) - 3604 If the price of Natural Gas remained the same until the 17th Nov, would the Future remain at 3604 and the cash price gradually make its way down from 3634 to 3604? so by 17th Nov, both Cash and Future would be at 3604? Thanks

@Caseynotes Would love your expert input here On my demo account, I have 2x positions open for Natural Gas, BUY Future (DEC23) - 3604 SELL Cash - 3634 30pt difference According to what I've read, the gap should close come expiry date as depicted in my post above. I'm currently receiving an interest payment for the cash position overnight (and paying a small IG fee). I'm looking for clarification on what the future price will do come expiry time. I'm assuming its one of the 3 outcomes below but not sure which and cant find much info on it. If the cash price remains the same until expiry: The future will climb gradually as the expiry approaches. Once the expiration date/time is hit, both CASH and DEC23 Future will be the same price - 3634 in this example. The 30pt gap will be closed. The future will expire at its current price 3604. The 30pt gap will remain. An overnight "adjustment" will be made to "artificially" close the gap. The future will expire at its current price 3604. the 30pt gap will remain. No adjustments will be made. The future will expire at its current price 3604. the 30pt gap will remain. The interest payments that were paid each night were daily "adjustments" to artificially close the gap. All of the above are wrong I have trades open on demo to test the outcome but would prefer not to have to wait until the 17th Nov to find out. Any help is greatly appreciated. Thanks.

Hi, I'm currently tracking cash/futures prices on some commodities (Crude Oil, Heating Oil, and London Gas) and would like to know how the futures contracts expire. The expectation is that the futures contract will be the same as the cash price on expiration as per this IG article: https://www.ig.com/ae/trading-strategies/what-is-a-futures-contract--201202 I'm looking for someone to confirm if this is the case and its not "equal to the spot price" via some arbitrary credit/debit function that happens overnight. EG, Natural Gas currently has a cash price of 3613 and a DEC23 Futures price of 3557 - a 56 point gap. The futures contract will expire on the 17th Nov - 14 days from now. If the Natural Gas cash price were to remain completely stationary at 3613 until the 17th Nov, what would the DEC23 futures price do as time passes? Would this slowly start to close the gap as the expiry nears and expire at ~3613 or would some debit/credit thing happen overnight to artificially close the gap and the DEC23 future would maintain the 56 point gap? The article quoted above suggests that once the expiry date hits, both DEC23 Future and Cash price should be 3613 and if their prices were plotted on a graph, it should show them converging like the attached image. Any input would be much appreciated. Thanks.

Hi, I'm looking for someone to sense check something for me. I've been looking at trading cash positions overnight and collecting the premium for them (carry trade). I believe I've found a viable strategy but seems a bit "too good to be true" which suggests I'm mis-understanding something or missing a huge risk somewhere. Heres what I have: BUY Oil - US Crude (£1) - for 8233.3- £1 per point This costs £1.40 to open and another £1.40 to close. An overnight credit will be paid to me of £1.78 for each night I hold this (obviously this rate can and will change daily): (CHECK IMAGE ATTACHMENT) then: SELL Oil - US Crude (£1) DEC-23 Futures Contract for 8260.0 - £1 per point - Expires on 17th Nov 2023 - 17 days from now This costs £3 to open and another £3 to close. there are no overnight fees or payments. (CHECK IMAGE ATTACHMENT) so as the Futures price should expire at the spot price this should technically make an arbitrage scenario? The difference in my BUY SPOT and SELL FUTURE is 26.7 points (I'm buying spot at 8233 and selling future at 8260). As the future contract will expire at the spot price, this should equate to £26.70 worth of profit. On top of that I should make £30.26 in overnight "premiums" minus fees so: +£26.70 from gap between spot and future +30.26 overnight "premium" -£8.80 Fees = £46.16 profit (assuming a premium of £1.70 per night which is likely to change for better or worse) Now I don't think for a second that the above is correct, and I believe I'm mis-understanding or missing a huge risk somewhere but for the life of me I cant see where. I did try this on a spread betting account but those account use "Forwards" instead which do not expire at the spot price (very sneaky) but "Futures" definitely should expire (and be settled) at the spot price if not rolled over. Can someone let me know where I'm going wrong here?

Technically, after the last deal date/time, you are bound to that deal regardless. I believe the option can and will still track the underlying (as some of them trade out of hours) but there isn't much you can do about it even if you wanted out for any reason. Actual expiry depends on the instrument. I'd recommend rolling or getting out prior to that date/time as your winning trade can end up being a loser (and vice versa) if the market shifts unexpectedly after hours. This article might have the answer you're looking for (Check the notes section at the bottom) https://www.ig.com/uk/help-and-support/spread-betting-and-cfds/fees-and-charges/what-are-ig-s-options-cfd-product-details

Sorry, cant edit my original post - this also applies to Daily Options:

You should be able to see the expiry details of an instrument on the trade page:

Thanks for the reply - that's helped a lot.

So from further reading it appears the following: (If this doesnt look right - please feel free to correct me) 1. My existing contract would be closed off at the current price of 18. This would secure a loss of £100 on my account. 2. A new position would be opened for Oct 21 contract with a price of 18 (give or take a bit for spread). My other questions still remain though: Other than the loss of closing my losing position and the spread of opening a new position, is there any other costs associated with rolling over? Would my new contract be opened with the same parameters? (EG, if I had a 2 point stop loss and a 2 point profit target, would these be implemented on the new contract?) In terms of "Rolling Over" automatically through IG, does this provide any benefit compared to me just closing the existing trade and opening a new one in its place? (Is it cheaper somehow for IG to roll an existing contract than it is for me to open a new one?) I'm currently testing this on demo but the next rollover isn't until 15 Sep so its slow going. Any help is appreciated.