| A legal agreement to make or take delivery of a specified instrument (for example, a commodity such as coffee or a financial instrument such as a bond, currency or share) at a fixed future date at a price determined at the time of dealing. Futures are a zero-sum game in the sense that the financial gain of one party equates to the loss of the other. In contrast to options, there is an obligation to complete the transaction. Futures contracts are forward contracts, meaning they represent a pledge to make a certain transaction at a future date. By making an offsetting trade, selling goods that had been bought in a previous contract, futures contracts can be closed.
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