Gold futures' margin
The initial margin is $5940 and maintenance margin $5400.  A simple search of Comex Gold Margin gives the CME group site. You then need to specify CMX metals to see the margins.  Gold is currently about $1300. A gold future is 100 oz. So the full contract is worth $130K. You want to 'go long' so you enter into a contract for Dec '14. You put up $5940, and if gold rises, you gain $100 for each $1 it goes up. Likewise on the downside. If gold drops $5.40, you lost $540 and will get a call to end the position or to put up more money. It's similar to stock margin requirements, only the numbers are much lower, your leverage with futures is over 20 to 1. The initial and overnight margin requirements are set by the exchanges (who calculate them using the Standard Portfolio of Analysis of Risk, or 'SPAN' system), and positions are market to market according to these at the end of the trading session. To find these margin requirements you will need to consult the website of the exchange on which the contract you are trading is issued (i.e. if you're trading on the London Metal Exchange it's no good looking at the Chicago Mercantile Exchange's margin requirements as a previous answer suggests!). However, for positions entered and exited within the same day, the daytrade margin rate will apply. This is set by your broker rather than the exchange, and can be as little as 10% of the exchange requirement. You can find a useful comparison of different margin types and requirements in the article I have published here: Understanding Margin for Futures Trading.
"There's a few layers to the Momentum Theory discussed in that book. But speaking in general terms I can answer the following: Kind of. Assuming you understand that historically the Nasdaq has seen a little more volatility than the S&P. And, more importantly, that it tends to track the tech sector more than the general economy.  Thus the pitfall is that it is heavily weighted towards (and often tracks) the performance of a few stocks including: Apple, Google (Alphabet), Microsoft, Amazon, Intel and Amgen.  It could be argued this is counter intuitive to the general strategy you are trying to employ. This could be tougher to justify.  The reason it is potentially not a great idea has less to do with the fact that gold has factors other than just risk on/off and inflation that affect its price (even though it does!); but more to do with the fact that it is harder to own gold and move in and out of positions efficiently than it is a bond index fund.   For example, consider buying physical gold.  To do so you have to spend some time evaluating the purchase, you are usually paying a slight premium above the spot price to purchase it, and you should usually also have some form of security or insurance for it.  So, it has additional costs.  Possibly worth it as part of a long-term investment strategy; if you believe gold will appreciate over a decade. But not so much if you are holding it for as little as a few weeks and constantly moving in and out of the position over the year. The same is true to some extent of investing in gold in the form of an ETF.  At least a portion of ""their gold"" comes from paper or futures contracts which must be rolled every month.  This creates a slight inefficiency.  While possibly not a deal breaker, it would not be as attractive to someone trading on momentum versus fundamentals in my opinion. In the end though, I think all strategies are adaptable.  And if you feel gold will be the big mover this year, and want to use it as your risk hedge, who am I or anyone else to tell you that you shouldn't." Yahoo finance does in fact have futures quotes.  But I've found them difficult to search for because you also have to know the expiration codes for the contract to find them. S&P 500 Emini quote for June 2012 "Your plan already answers your own question in the best possible way: If you want to be able to make the most possible profit from a large downward move in a stock (in this case, a stock that tracks gold), with a limited, defined risk if there is an upward move, the optimal strategy is to buy a put option.  There are a few Exchange Traded Funds (ETFs) that track the price of gold.  think of them as stocks that behave like gold, essentially.  Two good examples that have options are GLD and IAU. (When you talk about gold, you'll hear a lot about futures.  Forget them, for now.  They do the same essential thing for your purposes, but introduce more complexity than you need.) The way to profit from a downward move without protection against an upward move is by shorting the stock.   Shorting stock is like the opposite of buying it.    You make the amount of money the stock goes down by, or lose the amount it goes up by.   But, since stocks can go up by an infinite amount, your possible loss is unlimited. If you want to profit on a large downward move without an unlimited loss if you're wrong and it goes up, you need something that makes money as the stock drops, but can only lose so much if it goes up.   (If you want to be guaranteed to lose nothing, your best investment option is buying US Treasuries, and you're technically still exposed to the risk that US defaults on its debt, although if you're a US resident, you'll likely have bigger problems than your portfolio in that situation.) Buying a put option has the exact asymmetrical exposure you want.   You pay a limited premium to buy it, and at expiration you essentially make the full amount that the stock has declined below the strike price, less what you paid for the option.   That last part is important - because you pay a premium for the option, if it's down just a little, you might still lose some or all of what you paid for it, which is what you give up in exchange for it limiting your maximum loss. But wait, you might say.  When I buy an option, I can lose all of my money, cant I?  Yes, you can.    Here's the key to understanding the way options limit risk as compared to the corresponding way to get ""normal"" exposure through getting long, or in your case, short, the stock: If you use the number of options that represent the number of shares you would have bought, you will have much, much less total money at risk. If you spend the same ""bag 'o cash"" on options as you would have spent on stock, you will have exposure to way more shares, and have the same amount of money at risk as if you bought the stock, but will be much more likely to lose it. The first way limits the total money at risk for a similar level of exposure; the second way gets you exposure to a much larger amount of the stock for the same money, increasing your risk. So the best answer to your described need is already in the question:   Buy a put.  I'd probably look at GLD to buy it on, simply because it's generally a little more liquid than IAU. And if you're new to options, consider the following: ""Paper trade"" first.  Either just keep track of fake buys and sells on a spreadsheet, or use one of the many online services where you can track investments - they don't know or care if they're real or not. Check out www.888options.com.  They are an excellent learning resource that isn't trying to sell you anything - their only reason to exist is to promote options education.   If you do put on a trade, don't forget that the most frustrating pitfall with buying options is this:  You can be basically right, and still lose some or all of what you invest.  This happens two ways, so think about them both before you trade: If the stock goes in the direction you think, but not enough to make back your premium, you can still lose.  So you need to make sure you know how far down the stock has to be to make back your premium.  At expiration, it's simple: You need it to be below the strike price by more than what you paid for the option. With options, timing is everything.  If the stock goes down a ton, or even to zero - free gold! - but only after your option expires, you were essentially right, but lose all your money.  So, while you don't want to buy an option that's longer than you need, since the premium is higher, if you're not sure if an expiration is long enough out, it isn't - you need the next one. EDIT to address update: (I'm not sure ""not long enough"" was the problem here, but...) If the question is just how to ensure there is a limited, defined amount you can lose (even if you want the possible loss to be much less than you can potentially make, the put strategy described already does that - if the stock you use is at $100, and you buy a put with a 100 strike for $5, you can make up to $95.   (This occurs if the stock goes to zero, meaning you could buy it for nothing, and sell it for $100, netting $95 after the $5 you paid).   But you can only lose $5. So the put strategy covers you. If the goal is to have no real risk of loss, there's no way to have any real gain above what's sometimes called the ""risk-free-rate"".  For simplicity's sake, think of that as what you'd get from US treasuries, as mentioned above. If the goal is to make money whether the stock (or gold) goes either up or down, that's possible, but note that you still have (a fairly high) risk of loss, which occurs if it fails to move either up or down by enough.  That strategy, in its most common form, is called a straddle, which basically means you buy a call and a put with the same strike price.  Using the same $100 example, you could buy the 100-strike calls for $5, and the 100-strike puts for $5.  Now you've spent $10 total, and you make money if the stock is up or down by more than $10 at expiration (over 110, or under 90).   But if it's between 90 and 100, you lose money, as one of your options will be worthless, and the other is worth less than the $10 total you paid for them both." Oh really. I will have to check into that. It would be a bummer if that is the case. Something I will need to look into. If you don't need margin and are not trading the underlying asset (which I could see being a problem), then I don't see what the problem is. But I shall see. Thanks. This is a great question for understanding how futures work, first let's start with your assumptions The most interesting thing here is that neither of these things really matters for the price of the futures.  This may seem odd as a futures contract sounds like you are betting on the future price of the index, but remember that the current price already includes the expectations of future earnings as well! There is actually a fairly simple formula for the price of a futures contract (note the link is for forward contracts which are very similar but slightly more simple to understand).  Note, that if you are given the current price of the underlying the futures price depends essentially only on the interest rate and the dividends paid during the length of the futures contract.  In this case the dividend rate for the S&P500 is higher than the prevailing interest rate so the futures price is lower than the current price.  It is slightly more complicated than this as you can see from the formula, but that is essentially how it works. Note, this is why people use futures contracts to mimic other exposures.  As the price of the future moves (pretty much) in lockstep with the underlying and sometimes using futures to hedge exposures can be cheaper than buying etfs or using swaps. Edit: Example of the effect of dividends on futures prices For simplicity, let's imagine we are looking at a futures position on a stock that has only one dividend (D) in the near term and that this dividend happens to be scheduled for the day before the futures' delivery date.  To make it even more simple lets say the price of the stock is fairly constant around a price P and interest rates are near zero.  After the dividend, we would expect the price of the stock to be P' ~ P - D as if you buy the stock after the dividend you wouldn't get that dividend but you still expect to get the rest of the value from additional future cash flows of the company. However, if we buy the futures contract we will eventually own the stock but only after the dividend happens.  Since we don't get that dividend cash that the owners of the stock will get we certainly wouldn't want to pay as much as we would pay for the stock (P).  We should instead pay about P' the (expected) value of owning the stock after that date.   So, in the end, we expect the stock price in the future (P') to be the futures' price  today (P') and that should make us feel a lot more comfortable about what we our buying.  Neither owning the stock or future is really necessarily favorable in the end you are just buying slightly different future expected cash flows and should expect to pay slightly different prices. I know I can not trade futures realistically (I never claimed I could). All I wanted was some exposure to commodities.  If I could just trade many of these things in an ETF like GLD or XLV, I would have done that.   On the topic of margin, I appreciate your explaining that to me. I admit readily that I could never invest in futures straight, but I would like to get into commodities and other types of investments. I have tried to look for value in the market, but I have not found many things I would put my money in. I have gone as far as to look through OTC ADRs to find some foreign value, and I found nothing. I just want to be able to trade in any market, and I would consider shorting, but I don't like to be too risky. I want to go long on positions, and it seemed like commodities may be a good speculation to LOOK INTO. Taking rough rice as an example, there are millions (if not billions) of people who eat rice to survive. People will always need oil to fuel their cars. People will always need electricity. So I guess what I am trying to do is look into things that allow me to profit, regardless of where equities are going. The only thing I want to do is trade the options of the futures, not the actual futures themselves. I hope I did not confuse you. If I can earn even $20 from buying an option at a lower price and selling higher, it would allow me to have a greater breadth of tools to use when the market may be overvalued. Your question is a moving target. And my answer will be subject to revision. I disagree with the votes to close, as you are asking (imho) what role commodities and specifically oil, play in one's asset allocation. Right? How much may be opinion, but there's a place to ask if.  I'm looking at this chart, and thinking, long term, the real return is zero. The discussion regarding gold has been pretty exhausted. For oil, it's not tough to make the case that it will fluctuate, but long term, there's no compelling reason to believe its price will rise any faster than inflation over the really long term. UNG    United States Natural Gas Fund  Natural Gas USO    United States Oil Fund  West Texas Intermediate Crude Oil UGA    United States Gasoline Fund     Gasoline DBO    PowerShares DB Oil Fund     West Texas Intermediate Crude Oil UHN    United States Heating Oil Fund  Heating Oil I believe these are as close as you'd get. I'd avoid the double return flavors as they do not track well at all.  Update - I understand James' issue. An unmanaged single commodity ETF (for which it's impractical to take delivery and store) is always going to lag the spot price rise over time.   And therefore, the claims of the ETF issuer aside, these products will almost certain fail over time. As shown above, When my underlying asset rises 50%, and I see 24% return, I'm not happy. Gold doesn't have this effect as the ETF GLD just buys gold, you can't really do that with oil. Initial Margins and Maintenance margins can be used for both stocks as well as futures. It depends on which broker you use and what services they offer. The initial Margin is used to cover the purchase, the maintenance margin is used to ask additional funds in case the value of the underlying equity changes drastically before settlement. You can start with the investopedia article on initial margin and Maintenance margin I agree with your title, but am confused with your comment.  I am bullish on Gold in the long run.  I believe that current market fundamentals are poitning towards a longterm bullish trend on Gold.  These fundamentals are:  1. a weak USD.   Although the USD has appreciated as of late, I believe this will be short lived and reversed as soon as the situation in Europe relieves itself.  Once this happens, i forsee net outflows in the USD causing it to revert back to its long term deprciated trend, evidented by its performance (in real terms) over the past decade.  2.QE3 Similar to the above post, once the printing presses are turned back on, we will see all risk assets take off, a depreciation in the USD and of course a rise in the price of bullion  3.negative real rates As long as rates stay low (which they will for a while) Gold will have a cushion and will only push higher, given its historical negative correlation with this economic indicator.  4.Central Bank Buying If central banks are buying...I want in! Highest possible is meaningless.  Ex: Use 17x Leverage on E-mini S&P 500 Futures, perfectly long before an uptick and short before a downtick every minute. Goes to the moon in a day of 1,440 minutes.  You are supposed to use a Buy-and-Hold SPY, with leverage that makes the Standard Deviation of SPY same as your Portfolio/Algorithm, as benchmark. Gold's valuation is so stratospheric right now that I wonder if negative numbers (as in, you should short it) are acceptable in the short run.  In the long run I'd say the answer is zero.  The problem with gold is that its only major fundamental value is for making jewelry and the vast majority is just being hoarded in ways that can only be justified by the Greater Fool Theory.  In the long run gold shouldn't return more than inflation because a pile of gold creates no new wealth like the capital that stocks are a claim on and doesn't allow others to create new wealth like money lent via bonds.  It's also not an important and increasingly scarce resource for wealth creation in the global economy like oil and other more useful commodities are. I've halfway-thought about taking a short position in gold, though I haven't taken any position, short or long, in gold for the following reasons: Straight up short-selling of a gold ETF is too risky for me, given its potential for unlimited losses. Some other short strategy like an inverse ETF or put options is also risky, though less so, and ties up a lot of capital.  While I strongly believe such an investment would be profitable, I think the things that will likely rise when the flight-to-safety is over and gold comes back to Earth (mainly stocks, especially in the more beaten-down sectors of the economy) will be equally profitable with less risk than taking one of these positions in gold. "All margin is marked to market. Option longs do not post margin because long margin trading is forbidden. Equity longs must post margin if cash is borrowed to fund the purchase. Shorts of all kinds must post margin, and the rates are generally the same: a few standard deviations away from the mean daily change of the underlying. A currency futures trader, because of the involatility of most major monies, can get away with a few percentage points.  Commodities can get to around 10%.  Single equities are frequently around 20%, while indices can get back down to 10%. A future is a special case because both sides are technically short and long at the same time.  The easiest example to perceive is a currency future.  Which one is the buyer and which is the seller?  Both and neither. Contracts may be denominated for one side as the seller and the other the buyer, but contractually, legally, and effectively, both are liable to the other, and both must take delivery.  For non-currency assets, it only appears as if the cash seller is the buyer because cash is not considered an asset in the same way all other assets are, but the ""long"" is obligated to sell cash and buy the ""asset""." Hedge what risk?  What is your risk exposure?  I don't seem to understand what is your risk factor (is it a basket of metals), if its a non market product you can do the following:  1. Calculate correlation matrix between your basket and potential candidates (mining, etf's etc)  2. Sell the strongest correlation, however be careful as you are not only selling the rare earth prices but also the extraction margin and market risk.  3. Ideally you would find a futures contract or create some way to isolate the rare earths while cancelling out the margins (will be tough!). @OP:  It's all about risk.  With a cash buyer the decision is left up to one person.  With a financed buyer it adds another approval process (the lender).  It's another opportunity for the deal to fall through.  If the bank is the lender then there's even more risk.  They've already taken back the property once and incurred cost and they're setting themselves up to do it all over again.  The discount price can depend on a lot of factors.  Maybe it's a bad area and they need to get rid of it.  Maybe the appraisals for the area are low because of foreclosures and they know it will be hard for a Buyer to get a loan.  Lots of reasons as to what price they'd take. @Shawn:  Every deal has contingencies unless it's a foreclosure bought at auction.  Even if you are getting a steal from the bank in terms of price you're always going to have an inspection period.  If a Buyer doesn't need an inspection then he will just go to an auction and buy a property for an even cheaper price.