Stock Futures – Summary
- When the investor buys the stock futures, and if it results in physical settlement, then the investor has to pay the contracted price and take delivery of the stock. The margin money paid will, however, be adjusted against the total money that the investor should pay the exchange.
- The brokerage paid on the futures trade would have been directly expensed and not taken as part of the cost of the shares that was to be acquired.
- When the futures contract results in physical settlement, then the brokerage originally expensed should be capitalized and taken to the concerned shares account.