Futures
a.k.a. Futures contract
Standardised exchange-traded contracts to buy or sell something at a set price on a set future date.
In plain English
Standardised exchange-traded contracts to buy or sell something at a set price on a set future date.
A futures contract locks in a price now for a trade that happens later. Each contract on an exchange has a fixed size and expiry, and a clearing house guarantees it.
Farmers and companies use futures to hedge; speculators use them to bet on direction with leverage. Gains and losses are settled daily through margin. Most traders close or roll before expiry rather than taking delivery.
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