Future (Futures Contract)
Agreement to transact an asset at a predetermined price on a future date.
Detailed Description
Future (Futures Contract)
What is a futures contract?
A futures contract is a standardized legal agreement to buy or sell a specific asset at a predetermined price at a specified time in the future.
What are the types of futures contracts?
The two primary types are commodity futures and financial futures, with further classifications based on delivery methods.
How do futures contracts help in hedging?
Futures contracts allow producers and consumers to lock in prices and protect against adverse price movements.
What are the risks associated with trading futures?
Risks include substantial losses due to leverage, price volatility, and counterparty default.
Who regulates futures trading in the United States?
The Commodity Futures Trading Commission (CFTC) oversees the futures markets in the United States.