What is DI Futuro, And How To Work ?

DI Futuro: Understanding DI Futuro is essential for those who want to protect themselves from possible fluctuations in the economy’s interest rate. Thus, those closely following the fixed income market must follow the future DI.

What is DI Futuro?

DI Futures Contract is an agreement between two parties to buy and sell the expected DI interest rate between the trading day and a future date.

To protect against risk and improve the instruments, in June 1991, BM&F created the One-Day Interbank Deposit Average Rate Futures Contract.

In this way, it is possible to trade contracts for purchasing and selling DI futures on the stock exchange, to protect against possible fluctuations.

What is DI?

DI is the acronym for interbank deposits, a loan operation between large and small banks. Therefore, Cetip’s DI rate has become a primary benchmark for the cost of interbank transactions, serving as a reference for determining the profitability of various fixed-income assets.

How Does DI Futuro Work?

DI Futuro is an exchange-traded derivative that can use for short-term operations. For example, a speculator can seek a gain through the variation of the DI rate between the day of purchase of the derivative and the day of sale.

In this case, DI futures works as follows: the trader buys and sells a futures contract at the DI rate and has the option to sell this contract on a pre-defined date.

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What is the DI Futuro for?

In summary, the futures contract can protect an operation involving a futures contract against large fluctuations in the interest rate of some financial agreement.

In this way, it is possible to adopt some strategies to protect against interest rate fluctuations in the futures market.

For example: if an investor has a large debt with a floating interest rate, and the economic scenario believes that the interest rate will rise, he can sell a futures contract by changing the floating date to a fixed rate.

Depending on the case, you can do the opposite. That way, if he has a fixed-rate debt and believes in a low-interest rate scenario, he can buy a futures contract to protect himself.

It is worth mentioning that any forecast in the financial market is difficult to achieve since numerous variables can impact the leading indicators of this market.

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How Much Is A DI Futures Contract Worth?

A standard lot of DI futures are five contracts. Typically, a legal DI contract is worth R$100,000 or 100,000 points on the expiration date. The futures contract matures every month, always on the first business day of the following month. After that, futures contracts will trade on the stock exchange, and the investor chooses the redemption period.

In general, the futures contract protects investors against sudden fluctuations in interest rates in the economy.

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