Interesting question.
I think Didster is right - the clearing house won't give you £10 now if it is only going to get £10 back when the contracts expire.
I suppose the questions is what's the difference between closing out your future contract and simply selling it (if anything)?
It seems that you could realise the profit you've made on the future position in three ways:
1) Entering into a new future at the current future price. In this way you'll get the difference in prices when the contracts expire (or the dicounted value from the clearing house now).
2) Buying a future that already exists, which has the same future price as the one you already hold. In this way, you'll get the money now - by buying, I suppose I mean that someone would pay you to take the future off their hands.
3) Selling your future.
I think NeedToQualify's original question was to do with the difference between 1) and 3).
Do people tend to close out their futures positions, or sell them? I hope the question makes sense. I'd be interested to know what happens in practice too.
Thanks,
Sam
Last edited by a moderator: Sep 17, 2008