Newly Listed Futures Contracts
On September 17, 2024, 2 contracts were newly listed: NGX30H5 and NGXPENSIONH5.
Below are details of the contracts with sample scenarios.
Code: NGX30H5
Listing price: 3896.50
Expiration date: March 21, 2025
If a speculative trade, bought one contract NGX30H5 in September 2024, at the listing price of 3896. 50, 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 = (3896.50 × 1000) × 0.06 = ₦233,790
Now, if the trader held the contract until the expiration date (March 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 = (4300.25-3896.50) × 1000 x 1= ₦403,750
So, in this scenario, the speculative trader would have made a profit of ₦403,750 on one NGX30H5 Index Futures contract with an initial margin outlay of ₦233,790 representing 172.7% ROI between September and March. This example reflects the gearing effect of derivatives, but it is also worth noting that this gearing can also multiply potential loss.
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Code: NGXPENSIONH5
Listing price: 4169.50
Expiration date: March 21, 2025
If a speculative trader who, bought one contract of NGXPENSIONH5 in September 2024, at the listing price of 4169.50, 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 = (4169.50 × 1000) × 0.06 = ₦250,170
Now, if the trader held the contract until the expiration date (March 2025) when it closed at 4,450.25, the profit/ loss calculation would be as follows:
Profit = (Closing Price minus Listing Price) × Multiplier x number of contracts
Profit = (4450.25 – 4169.50) × 1000 x 1= ₦280,750
So, in this scenario, the speculative trader would have made a profit of ₦280,750 on one NGXPENSIONH5 Index Futures contract with an initial margin outlay of ₦250,170 representing 112.2% ROI between September and March. This example reflects the gearing effect of derivatives, but it is also worth noting that this gearing can also multiply potential losses.
