Trading Futures, how can it work?

[PollysCracker]

Hi,

I wonder how trading futures can actually work, fe Tezos (XTZ) futures is currently being traded on hitbtc.

My first question is how can an exchange list someone's sell order when the token is not transferable yet, you cant have a XTZ wallet on the exchange because you can't deposit so where do these token futures come from, from the exchange's supply itself?
second, what about supply, will the entire amount of XTZ created be available here, because if the total amount is not available (if holders of xtz tokens can't deposit their tokens onto an exchange) then the price set is way overpriced because there is only a fraction of the total supply available for trade.

Need some help clearing this up becaus i feel i'mmissing something here

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[ELI85]

The underlying asset need not be available, if the contract is settled in cash.

Futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash.

Read more: Futures http://www.investopedia.com/terms/f/futures.asp#ixzz4qxmNQpCI
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[ELI85]

edit: Also, the futures contract's specified settlement/execution date may be far enough in the future that the underlying will be available for delivery.

Hope that helps, I'm no pro BTW

[PollysCracker]

Yes ok but how can one sell XTZ if he cannot deposit yet, iow how can the seller prove he owns the tokens he wants to sell and if the sell offer is made dont those tokens need to be in escrow untill they are transferable? so the trade is succesfully completed and in meanwhile the trade can not be tampered with

Say i have tezos and i want to sell them on hitbtc, how would i do that?

[ELI85]

Hi, sorry for the long wait for a reply...

You do not need to own an asset to trade futures for it.

Say i have tezos and i want to sell them on hitbtc, how would i do that?

You will have to ask hitbtc. I don't know anything about specific exchanges, or their policies.
I don't trade futures, I've just picked up some info over time.
Good luck, be careful, and don't trade on margin until you REALLY KNOW that YOU KNOW what you are doing.

[xatoshie]

Hi I have the same doubts about Tezos Futures in HitBTC.

Do you know what happens with futures after XTZ tokens are released?
I don't really understand how futures works for tokens.
If I own 1 Tezos IOU then HitBTC will give me 1 XTZ after tokens are released?

Thanks

[jaro2k]

Well, it's simple.
Sure, you can't deposit so the way how it works is that you participate on ICO via exchange.
Note, the exchange needs to give you the permission to participate on ICO before you do it otherwise your tokens gets lost.

Ones the ICO releases the tokens and tokens becomes transferable you can finally withdraw your futures.

Hope it helps.

[Münzpräger]

https://blog.hitbtc.com/ico-faq/

It is basically that a few selected and trustworthy people and maybe HitBTC theirself participate in an ICO. These selected people probably provide proof that they have participated in the ICO. HitBTC then creates the IOUs on their exchange. Trading starts. These market makers have to provide the real coins/tokens to the buyers when they go live .
As for the supply of the IOUs, the picture indicates that it is not the max supply but only the amount the market makers purchased themselves.

You, as an average Joe, cannot deposit Tezos futures, you can only buy them from the market makers and then sell them again.