What is a futures contract?

Futures contracts are financial derivatives that oblige the buyer to purchase some underlying asset (or the seller to sell that asset) at a predetermined future price and date. A futures contract allows an investor to speculate on the direction of a security, commodity, or financial instrument, either long or short, using leverage.

How are futures regulated in the United States?

In the United States, futures contracts are regulated by the Commodity Futures Trading Commission (CFTC). Futures are derivative financial contracts that obligate the parties to transact an asset at a predetermined future date and price.

What are the different types of futures?

Metal Futures: These contracts trade in industrial metals, such as gold, steel, and copper. Currency Futures: These contracts provide exposure to changes in the exchange rates and interest rates of different national currencies. Financial Futures: Contracts that trade in the future value of a security or index.

Is a futures contract a derivative?

The asset transacted is usually a commodity or financial instrument. The predetermined price of the contract is known as the forward price. The specified time in the future when delivery and payment occur is known as the delivery date. Because it derives its value from the value of the underlying asset, a futures contract is a derivative .