Opțiunile către forward își schimbă diferența
Both parties could enter into a forward contract with each other.
Andy and Bob have entered into a forward contract. Bob, because he is buying the underlying, is said to have entered a long forward contract.
Conversely, Andy will have the short forward contract. Bob has made the difference in profit.
The similar situation works among currency forwards, in which one party opens a forward contract to buy or sell a currency e. As the exchange rate between U. Sometimes, the buy forward is opened because the investor will actually need Canadian dollars at a future date such as to pay a debt owed that is denominated in Canadian dollars.
Other times, the party opening a forward does so, not because they need Canadian dollars nor because they are hedging currency risk, but because they are speculating on the currency, expecting the exchange rate to move favorably to generate a gain on closing the contract. While the notional amount or reference amount may be a large number, the cost or margin requirement to command or open such a contract is considerably less than that amount, which refers to the leverage created, which is typical in derivative contracts.