futures contract definition

Long and Short - Definition The Long and the Short are the two parties involved in a futures contract. A futures contract is a legal agreement between two parties to trade an asset at a predefined price, on a specific date in the future. A futures market is the central hub where traders make futures contracts and a related financial vehicle called an "options contract." Unlike options, futures are binding contracts, and participating parties are obligated to honour its terms on its expiration date. Futures contract A legally binding agreement to buy or sell a commodity or financial instrument in a designated future month at a price agreed upon at the initiation of the contract by the buyer and seller. Trading Hours. It is called a futures contract or futures. Here, we define futures contract in general investing and explain what it means to you when trading with IG . Contract Size. Posted on October 25, 2019 by admin. Futures contracts are standardized according to the quality, quantity, and delivery time and location for each commodity. CME Group is the world's leading and most diverse derivatives marketplace. Last Trading Day. When a trader buys a futures contract they are taking on the obligation to buy the underlying asset, at the agreed price, when the futures contract expires. January, March, May, July, September, and November. We describe a futures contract with delivery of item J at the time T: There exists in the market a quoted price F(t,T), which is known as the futures price at time t for delivery of J at time T. The price of entering a futures contract is equal to zero. A standard NYMEX-CME crude oil futures contract represents 1,000 barrels of crude oil. Following Björk [10] we give a definition of a futures contract. These financial instruments are frequently used by both hedgers and speculators as a way to potentially anticipate future price movements, either for hedging against risks or for making profits. It also sets the price. Exchange. Commodities futures contracts are agreements to buy or sell a raw material at a specific date in the future at a particular price. Tick Size. Forex trading involves risk. Information and translations of futures contract in the most comprehensive dictionary definitions resource on the web. A futures contract is an agreement to buy or sell an agreed upon quantity of an underlying asset, at a specified date, for a stated price. Futures contracts are standardised to specify the quality and quantity of the underlying asset. Futures contract has a particular significance in relation to IG's platform. Meaning of futures contract. The two parties are known as the "Long" and the "Short". Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX and COMEX. Definition of Futures contract, what is Futures contract, what does Futures contract mean? Each exchange publishes contract size for all listed futures contracts on its website. The contract is for a set amount. Contract value is the current price of the futures contract multiplied by the contract size. Finance Glossary - Search our financial terms for a definition - London South East Lumber Futures Contract Specifications; Symbol. Here, the seller undertakes to deliver a standardized quantity of a particular financial instrument (or a commodity) at a certain price and a specified future date. Further, futures contracts require daily settlement, meaning that if the futures contract bought on margin is out of the money on a given day, the contract holder must settle the shortfall that day. The commodities can be things such as livestock, agriculture produce, metals, energy, and financial products. Futures contract definition. Bond Futures Explained . Some contracts allow a cash settlement instead of delivery. CME Group is the world's leading and most diverse derivatives marketplace. 110,000 board feet (~260 cubic meters) Contract Months. The company is comprised of four Designated Contract Markets (DCMs). Futures are a legal agreement, which authorises the writer and the owner to buy or sell a commodity or stocks at a predecided price and date in the future. Losses can exceed deposits . Definition of Futures Contract. A futures contract is an agreement between two parties. Futures contracts are standardised to specify the quality and quantity of the underlying asset. They are commonly referred to as ‘futures’. A futures contract is a standardized contract traded on an organized market to secure or commit to a price for a specified quantity of a given product (the underlying) at a future date. It specifies when the seller will deliver the asset. Forward Contracts/Forwards . What does futures contract mean? Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX and COMEX. futures contract synonyms, futures contract pronunciation, futures contract translation, English dictionary definition of futures contract. A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts defined by the exchange. But it is also complex and very risky. The three main areas of commodities are food, energy, and metals. Futures, commercial contract calling for the purchase or sale of specified quantities of a commodity at specified future dates.The origin of futures contracts was in trade in agricultural commodities, and the term commodity is used to define the underlying asset even though the contract is frequently completely divorced from the product. These are over the counter (OTC) contracts to buy/sell the underlying at a future date at a fixed price, both of which are determined at the time of contract initiation. CME. Futures Contracts are very similar to forwards by definition except that they are standardized contracts traded at an established exchange, unlike Forwards, which are OTC contracts. Home Finance Hedging Futures Contract Futures Contract . Futures contracts, often referred to as futures, are agreements that bind traders to buy or sell assets in the future at a specific price and date. Definition . 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