What is Futures?
Quick Answer
Futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price.
" Futures: where you can bet on tomorrow's disasters today! Because who doesn't love a little financial crystal ball gazing? "
BORING DEFINITION
Futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price. These standardized contracts are traded on exchanges and often used for hedging or speculative purposes. The value of a futures contract is derived from the underlying asset, such as commodities, stocks, or cryptocurrencies.
How Does Futures Work?
Futures contracts are agreements to buy or sell an asset at a future date for a price agreed upon today. They are traded on exchanges and are standardized in terms of quantity, quality, and delivery time. Traders use them either to hedge against risk or to speculate on price movements.
Why it matters: Understanding futures is crucial for investors looking to manage risk through hedging or seeking opportunities in speculative trading strategies.
REAL WORLD EXAMPLE
> A trader buys oil futures expecting prices to rise due to geopolitical tensions. When the prices do increase as predicted, they sell the futures contract for a profit.
Frequently Asked Questions About Futures
(1) What does 'futures' mean in finance? +
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π Today's Candidates for Futures
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