Due to the no-arbitrage principle, the price of a forward contract is calculated to make the value of the contract zero at contract initiation. Neither the long nor the short typically makes any payment to enter into the forward agreement. A special case is an off-market forward where, for whatever reason, the contract price is not set equal to the no-arbitrage price, and the long or short position makes a payment to the opposite counterparty to offset the difference. |
