Futures

Derivative contract whose buyer and seller agree to exchange the underlying asset for an agreed price (futures price) at a specific time in the future.

Difference from Other Derivatives

Unlike forward contracts, futures are standardized and trade at a regulated futures exchanges.

Unlike options, futures are binding to both sides (both buyer and seller have right and obligation to make the agreed future transaction).

Futures Contract Underlying Assets

Futures have traditionally been traded in commodities, but at present futures exist on a wide range of underlying assets, including stock indices, individual stocks, currencies, interest rates, bonds, and even weather.

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