Futures Contracts

A futures contract is a legally binding document that obligates two parties to an agreement to buy or sell a commodity or an asset at a predetermined price at some point in the future. The buyer is under an obligation to buy or receive the commodity after the expiration of the futures contract. Similarly, the seller of the commodity is under obligation to deliver it at the expiration date.

These are considered significant financial instruments in the trading market. A futures contract can also be used for hedging and trade speculation. Futures contracts are primarily used in financial futures, agricultural futures, currency futures, and energy futures.