Futures contracts — what they are and how they work in Poland

What is a futures contract?

A futures contract is an agreement between two parties to buy or sell a specific asset in the future at a predetermined price. It's standardized and traded on an exchange.

Unlike options — futures obligate both parties to execute the transaction.

How do futures work?

Mechanism

1. Buyer (long) commits to buying the asset at a specified time
2. Seller (short) commits to selling
3. Price is set at the time of contract conclusion
4. In practice, most contracts are closed before expiration (cash settlement)

Margin deposit

You don't need to pay the full contract value. A deposit is sufficient — usually 5–15% of value. This creates financial leverage.

Example: WIG20 contract worth 50,000 PLN requires deposit of ~5,000 PLN. Leverage 1:10.

What are futures contracts for?

Popular underlying instruments

• Stock indices — WIG20, S&P 500, DAX
• Currencies — EUR/USD, USD/PLN
• Commodities — oil, gold, wheat
• Bonds — e.g., US Treasury futures
• Cryptocurrencies — BTC, ETH (on CME)

Who uses futures?

• Hedgers — companies hedging against price changes (e.g., airlines hedge fuel prices)
• Speculators — profit from price changes, accepting risk
• Arbitrageurs — exploit price differences between markets

Risk

• Leverage — losses can exceed the deposited margin
• Margin call — if deposit falls below minimum, broker requires additional payment
• Liquidity — some contracts have low liquidity
• Rolling — need to close expiring contract and open new one (contango costs)

Futures vs options

Futures on GPW (Warsaw Stock Exchange)

The Warsaw Stock Exchange offers contracts on:

• WIG20 index
• Selected stocks (KGHM, PKO BP, PKN Orlen)
• Currencies (USD/PLN, EUR/PLN)

How Freenance can help

Freenance allows you to include futures contract positions in your complete portfolio picture, tracking exposure and leverage impact on your finances.

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