futures

A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. The futures markets are characterized by the ability to use very high leverage relative to stock markets.

Futures can be used either to hedge or to speculate on the price movement of the underlying asset. For example, a producer of corn could use futures to lock in a certain price and reduce risk (hedge). On the other hand, anybody could speculate on the price movement of corn by going long or short using futures.

Investopedia Says:
The primary difference between options and futures is that options give the holder the to buy or sell the underlying asset at expiration, while the holder of a futures contract is to fulfill the terms of his/her contract.

In real life, the actual delivery rate of the underlying goods specified in futures contracts is very low. This is a result of the fact that the hedging or speculating benefits of the contracts can be had largely without actually holding the contract until expiry and delivering the good(s). For example, if you were long in a futures contract, you could go short the same type of contract to offset your position. This serves to exit your position, much like selling a stock in the equity markets would close a trade.

Related Links:
For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them. Futures Fundamentals
There's one simple hurdle in the transition from stock to futures options: learning about product specifications. Becoming Fluent in Options on Futures
Learn how to read the volume reports, look at the relation to liquidity and interpret volume using open interest. Interpreting Volume for the Futures Market
Learn how these futures are used for hedging and speculating, and how they are different from traditional futures. Getting Started in Foreign Exchange Futures
Learn how to make gains even if you don't get in at the right time. Trading Is Timing
Learn how this overlooked area of trading can help improve your gains. Money Management Matters In Futures Trading
Hedging with futures can protect those who buy and sell commodities from adverse price movements. Grow Your Finances In The Grain Markets
Discover tips from a long-term strategy that can help you make better short-term trades. What Can Traders Learn From Investors?
Examining this data on currency futures can help you confirm the strength of a trend. Gauging Forex Market Sentiment With Open Interest
Find out how to protect your money against future attacks. Terrorism's Effects On Wall Street
These contracts allow for easier shorting, and provide more leverage and flexibility than stocks. Surveying Single Stock Futures

For more information on futures, visit Britannica.com.

This entry contains information applicable to United States law only.

Contracts that promise to purchase or sell standard commodities at a forthcoming date and at a fixed price.

This type of contract is an extremely speculative transaction and ordinarily involves such standard goods as rice or soybeans. Profit and loss are based upon promises to deliver—as opposed to possession of—the actual commodities.

A product that's purchased upon agreement of delivery at a specified future date. In the wine world, this equates to buying wine futures prior to the wine's release, which, in many cases, can be as much as two years in advance. Futures can usually be purchased directly from the winery or from wine retailers. Some American wineries, like Château Montelena and Ridge, sell futures for their top cabernet sauvignon wines at prices lower than what the suggested retail price will be when the wine's released. This practice typically works as a win/win situation for both parties-the winery gets advance payment and can put that money to use, the consumer is assured of getting the desired wine at a lower price (in most instances) than it will be upon release. Occasionally, it's possible to purchase a given wine 18 months after the futures release for less than the futures price. This happens when early hype for a vintage pushes up a futures' price, and then subsequent events moderate the released wine's retail price downward. The practice of selling futures is often associated with French wines like those from burgundy and bordeaux, especially highly sought after wines, such as those from first growth châteaux or super seconds. In France, buying futures (en primeur) is a much more evolved practice than it is in the United States. The individual producers, like the Bordeaux châteaux set the price they're going to charge for the initial limited portion (premier tranche) of a vintage's wines; sometimes additional tranches are offered, depending on demand. Then négociants, who generally sell these wines for the châteaux, pass these futures on through the distribution channels. In the United States, these French-wine futures come to importers, who typically sell to wholesalers and retailers, sometimes directly to individuals. Along every step of the way, each entity adds their cut to the consumer's price (which, of course, is also true for a bottle of wine). When purchasing futures it's important to find a reputable, well- established merchant. There's a significant wait for delivery of this wine bought on futures and you want to ensure that the merchant will still be there when the wine is released. Of course, in transactions like wine futures, there's always a risk of failure by someone in the supply chain or possible fraudulent dealings by disreputable merchants. Caveat emptor.

A contract to buy or sell a specified amount of a commodity or financial instrument at an agreed price at a set date in the future. If the price for the commodity or financial instrument rises between the contract date and the future date, the investor will make money; if it declines, the investor will lose money. The term also refers to the market for such contracts.

Dansk (Danish)
n. pl. - futureskontrakter, terminskøb

idioms:

• futures dealings    terminsforretninger

Français (French)
n. pl. - (Fin) contrats à terme

idioms:

• futures dealings    (Fin) faire des opérations à terme

Deutsch (German)
n. pl. - Termingeschäfte, Terminware

idioms:

• futures dealings    Terminhandel

Ελληνική (Greek)
n. pl. - (οικον.) προθεσμιακές συναλλαγές

idioms:

• futures dealings    (οικον.) προθεσμιακές συναλλαγές

Italiano (Italian)
contratti a termine

idioms:

• futures dealings    contratti a termine

Português (Portuguese)
n. pl. - títulos (m pl) ou mercadorias (f pl) comprados a termo (Econ.)

idioms:

• futures dealings    transações (f pl) futuras (Econ.)

Русский (Russian)
фьючерсные сделки, фьючерсные товары

idioms:

• futures dealings    фьючерсные сделки

Español (Spanish)
n. pl. - futuros

idioms:

• futures dealings    convenios para entrega futura, operaciones a término o a plazo

Svenska (Swedish)
n. pl. - terminsaffärer

中文（简体）(Chinese (Simplified))
期货

idioms:

• futures dealings    期货交易

中文（繁體）(Chinese (Traditional))
n. pl. - 期貨

idioms:

• futures dealings    期貨交易

한국어 (Korean)
n. pl. - (주식 시장의) 선물

日本語 (Japanese)
n. - 先物

idioms:

• futures dealings    先物取り扱い

עברית (Hebrew)
n. pl. - ‮סחורות ומניות הנמכרות למסירה בעתיד, חוזים לסחורות ומניות אלו‬

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