Short Futures
Selling a futures contract — agreeing to deliver (or cash settle) at expiry, and profiting as the price falls.
Being short futures means you have sold a futures contract and are obligated to deliver the underlying (or pay the cash settlement) at expiration. You profit when the futures price falls and lose when it rises.
Short futures require the same margin as long futures — both sides face symmetric risk in a standardized contract. Unlike shorting stocks, there is no borrow cost and no concept of a short squeeze in the margin sense (though sharp short-covering rallies certainly occur).
Short index futures are commonly used to hedge equity portfolio delta — a long equity manager sells ES to temporarily reduce market exposure without liquidating holdings.
Example
A trader sells 1 NQ contract at 19,500, expecting a pullback. NQ drops 200 points to 19,300. Gain = 200 × $20 = $4,000. If NQ rallied to 19,700 instead, the loss = 200 × $20 = $4,000.
Related Terms
Futures Contract
A standardized, exchange-traded agreement to buy or sell an asset at a fixed price on a set future date, settled daily via mark-to-market.
BeginnerHedger
A market participant using futures to offset price risk in an existing exposure — the opposite of a speculator.
IntermediateLong Futures
Buying a futures contract — agreeing to take delivery (or cash settlement) at expiry, and profiting as the price rises.
BeginnerMark-to-Market
The daily revaluation of open futures positions to the settlement price, with gains and losses settled in cash each session.
IntermediateSpeculator
A market participant who takes on futures risk with no underlying physical exposure, seeking to profit from price moves.
Beginner