Futures Contract

What does it Mean? A contractual agreement, generally made on the trading floor of a futures exchange, to buy or sell a particular commodity or financial instrument at a pre-determined price in the future. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash.
 
Investopedia Says... The terms "futures contract" and "futures" refer to essentially the same thing. For example, you might hear somebody say they bought "oil futures", which means the same thing as "oil futures contract". If you want to get really specific, you could say that a futures contract refers only to the specific characteristics of the underlying asset, while "futures" is more general and can also refer to the overall market as in: "He's a futures trader."

Terms Related Links

Assignable Contract
BOBL Futures Contract
Bond Futures
Commodity
Delivery Date
Exchange
Forward Contract
Futures
Futures Market
Underlying

Terms Related Links
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How are futures used to hedge a position?

Why do futures' prices converge upon spot prices during the delivery month?

How can a futures trader exit a position prior to expiration?

Who sets the price of commodities?

What is the difference between forward and futures contracts?

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