Bond Futures

AAA

DEFINITION of 'Bond Futures'

A bond future is a contractual obligation for the contract holder to purchase or sell a bond on a specified date at a predetermined price. A bond future can be bought in a futures exchange market and the prices and dates are determined at the time the future is purchased.

INVESTOPEDIA EXPLAINS 'Bond Futures'

Bond contracts are standardized, and are overseen by a regulatory agency that ensures a certain level of equality and consistency. However, this form of derivative can be risky because it involves trading at a future date with only current information. The risk is potentially unlimited, for either the buyer or seller of the bond because the price of the underlying bond may change drastically between the exercise date and the initial agreement.

RELATED TERMS
  1. Forward Contract

    A customized contract between two parties to buy or sell an asset ...
  2. Political Futures

    An investment wherein the payout comes after an election, based ...
  3. Futures Market

    An auction market in which participants buy and sell commodity/future ...
  4. Futures Contract

    A contractual agreement, generally made on the trading floor ...
  5. Underlying

    1. In derivatives, the security that must be delivered when a ...
  6. Delivery Date

    1. The final date by which the underlying commodity for a futures ...
Related Articles
  1. Options & Futures

    An Introduction To Managed Futures

  2. Options & Futures

    Options On Futures: A World Of Potential ...

  3. Investing

    What is the difference between forward ...

  4. Trading Strategies

    Market Strength Tutorial

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center