Futures contract A futures contract is a binding contract where the exchange markets a future delivery of an asset at a pre-set price, and at a pre-set future date. Think of it as making a reservation for something you will use later — but instead of a table at a restaurant, you are reserving the ability to buy and sell currencies, commodities or other financial assets. The most distinctive feature of futures contracts that sets them apart is the obligation associated with them. Unlike options, which only give you the right to trade but not the obligation, with futures contracts, both parties to the agreement must close out their contract on the set expiration date. This provides a guarantee to both buyers and sellers and is a great risk management and speculative tool. Futures are traded in various markets such as commodities (e.g., oil, gold, wheat), stock indices (S&P 500, NASDAQ), cryptocurrencies (Bitcoin, Ethereum) and the forex market where one trades currency pa...
