This chapter builds the vocabulary and contract mechanics used throughout Series 3. It is part of Market Knowledge, the larger of the exam’s two independently scored parts.
What You'll Learn
| Unit | Focus |
|---|---|
| General Theory | Why futures markets exist and how futures differ from securities |
| The Futures Contract | Forwards, offsetting, clearing, and delivery |
| Structure of Futures Markets | Normal and inverted markets |
| Hedging Theory | Risk reduction, short hedges, and long hedges |
| Speculative Theory | Leverage, risk, liquidity, and volatility |
| Futures Terminology | Core futures terms |
| Options Terminology | Core options-on-futures terms |
Chapter Strategy
Anchor the difference between a cash position and a futures position before moving on. The direction of a hedge, the meaning of basis, and every later strategy depend on that foundation.