A futures contract (futures) is a legal agreement to buy or sell a specific commodity asset or security at a predefined price at a particular time in the future. Futures contracts are standardized in quality and quantity to facilitate trading on the futures exchange. The buyer of a futures contract undertakes to buy and receive the underlying asset at the futures contract’s expiration. The seller of a futures contract takes to provide and deliver the underlying asset at the expiration date.
The subject of such an agreement (the underlying asset) may be currency, shares, bonds, commodities, interest rates, inflation, etc.
2020-08-13 • Updated