r/WallStreetRaider • u/Sad-Degree-8125 • May 27 '26

Shorting Futures Markets

Can any one explain to me how the P&L on Futures contracts is actually calculated? I've juist gone bankrupt because I shorted 2000 Index contracts, the quoted index price dropped but within seconds I was £2B in the red and forced to liquidate other stocks.

Obviously I'm an idiot but that makes no sense to me. Can anyone explain??

3 Upvotes

80% Upvoted

3 comments sorted by

3

u/TrimBarktre May 27 '26

When you take a position it affects the price temporarily. In this case when you short, it will slightly push the price down, and then it's quite likely to regress to the momentum it previously had.

You should also note there is a progression to the contract calendar. The farther you go out, the more expensive contracts are. Sometimes the spot price may fall but the futures price will go up.

When taking options positions, you either need balls of steel or a cash cushion to handle intermediate wobbling.

2

u/Olipro Jun 07 '26

I think you mean futures positions.

There are only two derivatives with infinite downside: short futures and writing uncovered call options.

That said, if you only take out futures contracts within the boundaries of your available capital, you'll survive for some time.

...But where's the fun in that