Futures represent a standardized forward contract or legal agreement to buy or sell something at a predetermined price and future date, between parties not known to each other. Futures contracts detail the quantity of the underlying asset and are standardized to facilitate trading on a futures exchange.
The underlying asset is bought or sold at a set price, regardless of the current market price at the contract’s expiration date, and is usually a physical commodity or financial instrument. Futures can be used for hedging or trade speculation.
Also known as derivative financial contracts.
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