Futures are financial derivatives that bind the parties to trade an item at a defined price and date in the future. Regardless of the prevailing market price at the expiration date, the buyer or seller must acquire or sell the underlying asset at the specified price.
Physical commodities or other financial instruments are examples of underlying assets. Futures contracts specify the quantity of the underlying asset and are standardized to make futures trading easier. Futures can be utilized for trading speculation or hedging.
A futures trading is a vital financial exchange where traders can trade standardised futures contracts to buy specific quantities of a commodity or financial instrument at a stated price with delivery set at a specified time in the future. It is also refers to as the derivative market trade.
Futures Contracts: Agreement to buy or sell an underlying security at a predetermined date at an agreed price. The difference between futures and options is that with options, the buyer has the right, not the obligation. With futures, both parties are obliged to fulfil their part of the bargain.