What is Gross Position and How Does it Differ from Net Position?

Derivatives are inherently complex instruments, and the trading process for futures contracts is equally intricate. In mid-2025, TFEX will allow retail investors to open positions on both sides of the same contract (Gross Position) overnight. This development creates opportunities for investors to trade in various dimensions, including hedging to manage risk, short-term speculation in directions opposite to their current holdings, or crafting complex trading strategies without contract offsetting.

The Futures and Options team at Kasikorn Securities explains the differences between the current Net Position and the upcoming Gross Position, as well as the margin calculations under Net Margin and Gross Margin, to enhance reader understanding (see Table 1).

• Net Position refers to holding a net position on one side of the same contract.
• Gross Position refers to holding positions on both sides of the same contract without offsetting the obligations.
• Net Margin is the margin calculation method that offsets risk positions within the same contract.
• Gross Margin is the margin calculation method that sums the margin requirements for all contracts without offsetting risk.

Example Assuming SET50 Index Futures: Initial Margin (IM) = 10,000 baht, Maintenance Margin (MM) = 7,000 baht, and IM for spread pairs = 2,500 baht. The client has an Equity Balance (EB) of 100,000 baht (see Table 2).

• On day T: Open Long position with 10 contracts, using IM of 100,000 baht and MM of 70,000 baht.
• On day T+1: Loss reduces EB to 80,000 baht, so the client opens Short position with 10 contracts, resulting in IM of 0 baht.
• On day T+2: The client wants to close the Long position, but with only 80,000 baht EB, can close only 8 contracts. To close all 10 contracts, an additional margin of 20,000 baht is required.

Investors wishing to use the Gross Position service must request permission from their brokerage firm. Kasikorn Securities will provide Gross Position service and calculate margins using Net Margin from 2026 onward.

Although using Gross Position allows investors to develop more trading strategies, the following important points must be noted:

1. Once opting for Gross Position, the brokerage cannot convert positions back to Net Position.

2. Orders to open or close positions must be clearly specified.

3. Gross Position should not be used to circumvent margin calls or forced liquidation.

4. Auto Net Position feature will be disabled for Gross Position users.

5. When closing one side of the position, sufficient margin must remain to cover the IM of the remaining side.

6. If contracts expire without closing, customers will incur regular closing fees.

7. Combination orders used for rollover will not offset nearby series contracts automatically.

The benefit of using Gross Position is that investors can implement primary strategies with different directions from secondary strategies. For example, holding a Long S50Z25 position at 750 points, which rises to 850 points, and anticipating a short-term pullback, investors can open Short positions to capture short-term profits without closing the initial Long position. This is possible with Gross Position, unlike Net Position where positions offset at the end of the day. Additionally, Gross Position allows trading during TFEX market closures when international markets remain open, such as trading gold and currencies. Opening Gross Positions with equal contract amounts can eliminate price risk exposure.

To prepare for Gross Position futures trading, this article aims to help readers understand the differences between Net and Gross Positions, the considerations when using Gross Position services, and the benefits it offers compared to the current system.