What's what in finances: Futures What's what in finances: Futures

What's what in finances: Futures

All the word concepts about finances you need to know, are here

These are financial contracts that secure a predetermined future date and price for an asset. The assets used in futures contracts include commodities, stocks, and bonds. 

With futures, you buy or sell a specific financial instrument (such as treasury bills, certificates of deposit, or foreign currencies) at a specific future date and a specified price. The market value of these contracts generally moves in a direction opposite to that of the interest rates.

Futures contracts detail the quantity of the underlying asset and are standardized to facilitate trading on a futures exchange. It can be used for hedging or trade speculation.

Futures also allow traders to lock in the price of the underlying asset or commodity. These contracts have expirations dates and set prices that are known upfront. Futures are identified by their expiration month. For example, a December gold futures contract expires in December. 

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