I am reading the curriculum and now quite confused with the terminology “future price”. As future is a standardized version of forward, future price is fixed at initiation. But also in the book, they say future price changes and the daily settlement will reflect the gain/loss from these changes to our margin account, ultimately the future price will converge to the spot price S(T).
So, could I understand as follows:
- The future price of the future we bought is fixed, and it is different with:
- The future price which the book says that it changes daily. And, it actually is the initiated price of similar futures (having same expiration date with the future we bought) created and traded each day after the date we bought our future.