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Futures contract
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===Speculators=== Speculators typically fall into three categories: position traders, [[day trader]]s, and swing traders ([[swing trading]]), though many hybrid types and unique styles exist. With many investors pouring into the futures markets in recent years controversy has risen about whether speculators are responsible for increased volatility in commodities like oil, and experts are divided on the matter.<ref>{{cite news |last1=Dreibus |first1=Tony C.|url=https://www.bloomberg.com/news/2011-06-05/commodity-bubbles-caused-by-speculators-need-intervention-un-agency-says.html |title=Commodity Bubbles Caused by Speculators Need Intervention, UN Agency Says|newspaper=Bloomberg |date= June 5, 2011 |access-date=July 2, 2011}}</ref> An example that has both hedge and speculative notions involves a [[mutual fund]] or [[separately managed account]] whose investment objective is to track the performance of a stock index such as the S&P 500 stock index. The [[portfolio manager]] often "equitizes" unintended cash holdings or cash inflows in an easy and cost-effective manner by investing in (opening long) S&P 500 stock index futures. This gains the portfolio exposure to the index which is consistent with the fund or account investment objective without having to buy an appropriate proportion of each of the individual 500 stocks just yet. This also preserves balanced diversification, maintains a higher degree of the percent of assets invested in the market and helps reduce [[tracking error]] in the performance of the fund/account. When it is economically feasible (an efficient amount of shares of every individual position within the fund or account can be purchased), the portfolio manager can close the contract and make purchases of each individual stock.<ref>{{Cite web|url=https://www.cfainstitute.org/-/media/documents/protected/refresher-reading/2020/pdf/swaps-forwards-futures-strategies.ashx|title=Swaps, Forwards, and Futures Strategies|last1=Valbuzzi|first1=Barbara|publisher=CFA Institute|page=23|year=2019|access-date=2020-05-18}}</ref> The social utility of futures markets is considered to be mainly in the transfer of [[risk]], and increased liquidity between traders with different risk and [[time preference]]s, from a hedger to a speculator, for example.<ref name="chicagofed.org"/>
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