Assignable contract is a futures contract which has a provision that permits the holder of the contracts to convey the right of assignment to any third party. In this way, the contract holder has the right to have the paybacks of the contract before the closing happens while the obligations and rights are assigned to other person/entity.
How Does Assignable Contract Applied in Options Market?
The application can be made clear by an example. Suppose an investor has a futures contract which has its closing on a later date. At present, the security stands at an appreciation of 2% before the contract closing date has arrived. In this case, the holder can choose to assign this contract (assignable contract) to another party for the appreciated rate and book profits on the contract before it closes.
However, a majority of the contracts that are exchange traded do not categorize as assignable contracts. Moreover, this provision is not available in all the futures contracts.
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