futures vs. forwards

[zerorisk]

I understand that the futures price must equal the spot price at expiration to prevent arbitrage , but , why isnt this true for forwards as well ?
Another thing , why do we account for the carrying costs in futures and ignore them in forwards ?

 

[S2000magician]

zerorisk wrote:I understand that the futures price must equal the spot price at expiration to prevent arbitrage, but, why isnt this true for forwards as well?

It is.

zerorisk wrote:Another thing , why do we account for the carrying costs in futures and ignore them in forwards?

We don’t ignore them in forwards.

 

[zerorisk]

Thx for the clarification , but I am confused now cuz both concepts were only addressed in the futures reading, that’s why I thought they are futures specific , what am I missing here ?

 

[S2000magician]

Because forwards aren’t traded actively you don’t see the convergence of the forward price to the spot price as vividly as you do for futures; nonetheless, the prices do converge.
I don’t know why they don’t mention carrying costs in the section on forwards; it’s pretty basic and widly recognized. I know that at Level III they mention it.

 

[zerorisk]

I see , thanks once again

 

[S2000magician]

My pleasure.