Search Investopedia

Futures Contract

Filed Under » ,
Dictionary Says

Definition of 'Futures Contract'

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

Investopedia explains 'Futures Contract'

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."

Video Definition

Related Definitions

  •

    Front Month

    Used in futures trading to refer to the contract month with an expiration date closest to the current date, which is often in the same month. In other words, this would be the shortest ...
    Read More »

  • Political Futures

    An investment wherein the payout comes after an election, based on the winning party. Investors pay a flat fee to purchase the future and will receive $100 if the candidate they chose ...
    Read More »

  • Futures

    A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date ...
    Read More »

    • Futures Market

      An auction market in which participants buy and sell commodity/future contracts for delivery on a specified future date. Trading is carried on through open yelling and hand signals in a ...
      Read More »

    • Forward Contract

      A cash market transaction in which delivery of the commodity is deferred until after the contract has been made. Although the delivery is made in the future, the price is determined on ...
      Read More »

    • Delivery Date

      1. The final date by which the underlying commodity for a futures contract must be delivered in order for the terms of the contract to be fulfilled. 2. The maturity date of a currency ...
      Read More »

    • Public Elevator

      A grain elevator that, for an associated fee, stores the bulk grain of public clients. A public elevator allows farmers to store grain without having to build individual silos, and are ...
      Read More »

    • Pork Bellies

      A cut of pork that comes from the belly of a pig. Pork bellies were traded in the futures market, as they are important components of meat products, such as bacon. Trading in pork ...
      Read More »

    • Clearing House

      An agency or separate corporation of a futures exchange responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery and ...
      Read More »

    • 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 ...
      Read More »

Articles Of Interest

Sponsored links
Hot Definitions
Partner Links
Suggested Definitions