What is a futures contract?

What is a 'Futures Contract'. A futures contract is a legal agreement to buy or sell a particular commodity or asset at a predetermined price at a specified time in the future. Futures contracts are standardized for quality and quantity to facilitate trading on a futures exchange.

What is the difference between buyer and seller of a futures contract?

The buyer of a futures contract is taking on the obligation to buy the underlying asset when the futures contract expires. The seller of the futures contract is taking on the obligation to provide the underlying asset at the expiration date.

What are futures options?

Futures options can be thought of as a 'second derivative' and require the trade to pay attention to detail. The key details for options on futures are the contract specifications for both the option contract and the underlying futures contract. Many futures contracts have options attached to them.

Can you buy futures on stocks?

You can buy futures on commodities like coffee, stock indexes like the S&P 500 or cryptocurrencies like Bitcoin. Leverage and margin problems are risks of futures trading, which is less regulated than stock trading. What are futures? Futures are derivative contracts to buy or sell an asset at a future date at an agreed-upon price.