Futures Equivalent

Futures Equivalent

The number of futures contracts needed to be associated with a speculative option position.

Notes:

A futures equivalent can be calculated by taking the number of options and multiplying it by the previous day's risk factor (delta) for the same option series. This term is generally used to refer to the equivalent position in futures contracts that is needed to have a risk profile identical to the option.

See also: Delta, Futures Contract, Option