Definitions for futures contract
fu·tures con·tract

Princeton's WordNetRate this definition:0.0 / 0 votes

1. futures contractnoun

   an agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date; the contract can be sold before the settlement date

WiktionaryRate this definition:0.0 / 0 votes

1. futures contractnoun

   a standardized contract, traded on a futures exchange, to buy or sell a standardized quantity of a specified commodity (or financial instrument) of standardized quality at a certain date in the future, at a price (the futures price).

WikipediaRate this definition:0.0 / 0 votes

1. Futures contract

   In finance, a futures contract (sometimes called a futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset transacted is usually a commodity or financial instrument. The predetermined price of the contract is known as the forward price. The specified time in the future when delivery and payment occur is known as the delivery date. Because it derives its value from the value of the underlying asset, a futures contract is a derivative. Contracts are traded at futures exchanges, which act as a marketplace between buyers and sellers. The buyer of a contract is said to be the long position holder and the selling party is said to be the short position holder. As both parties risk their counter-party reneging if the price goes against them, the contract may involve both parties lodging as security a margin of the value of the contract with a mutually trusted third party. For example, in gold futures trading, the margin varies between 2% and 20% depending on the volatility of the spot market.A stock future is a cash-settled futures contract on the value of a particular stock market index. Stock futures are one of the high risk trading instruments in the market. Stock market index futures are also used as indicators to determine market sentiment.The first futures contracts were negotiated for agricultural commodities, and later futures contracts were negotiated for natural resources such as oil. Financial futures were introduced in 1972, and in recent decades, currency futures, interest rate futures, stock market index futures, and cryptocurrency inverse futures and perpetual futures have played an increasingly large role in the overall futures markets. Even organ futures have been proposed to increase the supply of transplant organs. The original use of futures contracts was to mitigate the risk of price or exchange rate movements by allowing parties to fix prices or rates in advance for future transactions. This could be advantageous when (for example) a party expects to receive payment in foreign currency in the future and wishes to guard against an unfavorable movement of the currency in the interval before payment is received. However, futures contracts also offer opportunities for speculation in that a trader who predicts that the price of an asset will move in a particular direction can contract to buy or sell it in the future at a price which (if the prediction is correct) will yield a profit. In particular, if the speculator is able to profit, then the underlying commodity that the speculator traded would have been saved during a time of surplus and sold during a time of need, offering the consumers of the commodity a more favorable distribution of commodity over time.

ChatGPTRate this definition:0.0 / 0 votes

1. futures contract

   A futures contract is a legal agreement between two parties to buy or sell a specific quantity and quality of an asset or commodity at a predetermined price on a specified future date. It is often traded on a futures exchange and used for hedging or speculation on price movements. The terms of the contract are standardized, except for the price, which is determined by open market bidding.

WikidataRate this definition:0.0 / 0 votes

1. Futures contract

   In finance, a futures contract is a standardized contract between two parties to buy or sell a specified asset of standardized quantity and quality for a price agreed upon today with delivery and payment occurring at a specified future date, the delivery date. The contracts are negotiated at a futures exchange, which acts as an intermediary between the two parties. The party agreeing to buy the underlying asset in the future, the "buyer" of the contract, is said to be "long", and the party agreeing to sell the asset in the future, the "seller" of the contract, is said to be "short". The terminology reflects the expectations of the parties—the buyer hopes or expects that the asset price is going to increase, while the seller hopes or expects that it will decrease in near future. In many cases, the underlying asset to a futures contract may not be traditional commodities at all – that is, for financial futures the underlying item can be any financial instrument; they can be also based on intangible assets or referenced items, such as stock indexes and interest rates. While the futures contract specifies a trade taking place in the future, the purpose of the futures exchange institution is to act as intermediary and minimize the risk of default by either party. Thus the exchange requires both parties to put up an initial amount of cash, the margin. Additionally, since the futures price will generally change daily, the difference in the prior agreed-upon price and the daily futures price is settled daily also. The exchange will draw money out of one party's margin account and put it into the other's so that each party has the appropriate daily loss or profit. If the margin account goes below a certain value, then a margin call is made and the account owner must replenish the margin account. This process is known as marking to market. Thus on the delivery date, the amount exchanged is not the specified price on the contract but the spot value.

Matched Categories

1. • Derivative Instrument

How to pronounce futures contract?

1. Alex

   US English

   David

   US English

   Mark

   US English

   Daniel

   British

   Libby

   British

   Mia

   British

   Karen

   Australian

   Hayley

   Australian

   Natasha

   Australian

   Veena

   Indian

   Priya

   Indian

   Neerja

   Indian

   Zira

   US English

   Oliver

   British

   Wendy

   British

   Fred

   US English

   Tessa

   South African

How to say futures contract in sign language?

Numerology

1. Chaldean Numerology

   The numerical value of futures contract in Chaldean Numerology is: 9

2. Pythagorean Numerology

   The numerical value of futures contract in Pythagorean Numerology is: 6

Examples of futures contract in a Sentence

1. Kenneth Tveter:

   You can try and pick winners in the shipping segment of the equity markets, but to get a pure play you need the derivatives market, the new fund will look at all the parts of refining that will be affected by the new regulations. In another sign of the impact of IMO 2020, China said on July 4 that it planned to launch a futures contract for low-sulphur fuel oil by the end of the year. Dutch asset manager Robeco is also focussing on fuel, but it's investing in oil refineries that are well-placed to produce large quantities of low-sulphur diesel.

References

1. ^ Princeton's WordNet
   http://wordnetweb.princeton.edu/perl/webwn?s=futures contract
2. ^ Wiktionary
   https://en.wiktionary.org/wiki/Futures_Contract
3. ^ Wikipedia
   https://en.wikipedia.org/wiki/Futures_Contract
4. ^ ChatGPT
   https://chat.openai.com
5. ^ Wikidata
   https://www.wikidata.org/w/index.php?search=futures contract