| 1. Hedging
If you own a portfolio of stocks and have a view that the market
has risen sharply over past few weeks, and you believe the index
may fall back. You can benefit from futures trading as hedging tools.
By holding short position in Futures, if you lost in stock portfolio,
you profit from futures positions.
2. Speculating
If you believe the market will rise, you can make a profit by taking
a Long position in Futures market. And if you believe the market
will fall, you can also take a profit in a fall market by taking
a Short position in Futures market.
3. Short selling possibility
If you believe the market will decline, you can take a short position
in Futures market. This might not be possible in the stock market,
as the situations might not always you to make a short sell.
4. Small investment outlay
To initiate one futures contract, you need to put initial margin
approximately 10% of the contract value. Therefore, with the small
investment outlay, you will have high ROI.
Example, if the market rises 10%, 1,000,000 Baht
investment in cash market can make 100,000 Baht profit, which accounted
for 10%. To invest in Futures contracts which worth roughly 1,000,000
Baht, only 100,000 Baht is required for margin. A gain of 10% of
the market is 100% ROI
5. Broad market exposure to the Thailand stock market
Buying SET50 Futures is like buying 50 components SET stocks
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