DEFINITION of 'Assignable Contract'

A futures contract with a provision permitting the contract holder to convey his or her rights of assignment to a third party. This enables the contract holder to assign the rights and obligations of a contract to another to perform and receive the benefits of that contract before it closes.

BREAKING DOWN 'Assignable Contract'

For example, if an investor holds a futures contract and the holder finds that the security has appreciated by 1% at or before the contract is closed, then the contract holder may decide to assign the contract to a third party for the appreciated amount, thus making a profit on the contract before it even closes.

Not all futures contacts have this provision. In fact, most exchange traded contracts are not assignable.

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