Futures Contract
What is Futures Contract?
A standardized agreement to buy or sell an asset at a set price on a future date.
Understanding Futures Contract
Futures trade on exchanges and cover commodities, currencies, interest rates, and stock indexes. Unlike options, both sides are obligated to complete the trade, though most positions are closed before delivery.
Producers and buyers use futures to lock in prices; speculators use them for leveraged bets. Gains and losses are settled daily, so losses can require additional margin quickly.