Definition
Standardized legal agreements to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future. These contracts are traded on futures exchanges and are used for both hedging and speculation.
Example Usage
"A manufacturer might purchase aluminum futures contracts to lock in prices for raw materials needed in production next quarter.”
Related Terms
Risk TransferDerivatives MarketsOptionsHedgingCommodity MarketsForwardsDerivatives
Tags
DerivativesRisk ManagementCommodities
Course Module
Module 1: Introduction to Financial Markets