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Investing Glossary:
Futures contract
Copyright 2010,
Campbell R. Harvey. All Rights Reserved.
Do not reproduce without explicit permission.
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| Definition: |
| A legally binding agreement Buy or Sell a Commodity or financial instrument in a designated Future month at a price agreed upon today by the buyer and seller. Futures contracts are standardized according to the quality, quantity, and Delivery time and location for each commodity. A futures Contract differs from an option because an option is the Right to buy or sell, while a Futures contract is the promise to actually make a transaction. A future is part of a Class of securities called derivatives, so named because such securities derive their value from the worth of an Underlying investment.
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