Futures

The futures market is a platform where traders can purchase or sell futures contracts. These contracts typically involve one party agreeing to buy a specified amount of securities or a commodity and take delivery on a specified future date, while the selling party agrees to provide it. The primary goal of futures contracts is to help producers and suppliers of commodities to manage market volatility. They do this by negotiating contracts with investors who agree to take on both the risks and rewards of an unstable market. Futures markets are no longer just for agricultural contracts. Today, they involve the buying, selling, and hedging of financial products and future values of interest rates. These financial products can be created or "made" as long as open interest increases, unlike other securities that are issued. Futures markets or futures exchanges are where these financial products are traded for delivery at some future agreed-upon date, with a fixed price at the time of the deal. They are an important part of the financial system and tend to increase in size during uncertain stock market outlooks.

Last updated