Comment by seanhunter
8 months ago
A futures trade always involves variation margin, and if you read a margin agreement you’ll see it is a credit agreement. That’s so people don’t just run away from trades which are underwater and screw the other side over.
That is something you have to do when you do speculative trades. That has zero to do with managing inventory.
You are not required to take loan to buy futures. You can do so, because then you can bet more then you have. But you dont have to.
You have to have a margin agreement in place to do any futures trading regardless of investment/hedging/speculation purpose. It's a requirement of the futures exchanges. For example, here's the "about margin" page of the CME group
https://www.cmegroup.com/education/courses/introduction-to-f... what-is-needed.html
"Futures margin is the amount of money that you must deposit and keep on hand with your broker when you open a futures position. It is not a down payment and you do not own the underlying commodity."
Notice you have to have margin on deposit to open any futures position.