Futures are derivative financial contracts that obligate parties to buy or sell an asset at a predetermined future date and price. Futures are traded on exchanges and can be used to hedge or speculate on the future price of an underlying commodity, such as a stock, currency, index, or interest rate. They generally only require the delivery, or "settlement," of the underlying asset at maturity.Futures markets enable firms to hedge their long position in assets, mitigate price exposure in the event of volatility, and gain a better understanding of future price movements. Futures markets are a useful tool for hedging, speculation, risk management and risk transfer. Learn more about futures.A futures contract is agreed upon by two parties: the seller of the asset and the buyer, also known as the "long" or "short" position holder. The seller agrees to deliver an asset to a buyer at a certain date, at a negotiated price and in exchange for the difference between the current market price and the fixed price in the futures contract.
