Finance glossary
Futures Contract
Definition
A standardized agreement to buy or sell an asset at a set price on a future date.
A futures contract obligates the parties to trade an asset at a predetermined price on a specified date. Traded on exchanges and marked to market daily, futures are used to hedge or speculate on commodities, indices, currencies, and rates. They are highly leveraged through margin.
In a sentence
The airline used a futures contract to lock in jet-fuel prices months ahead of time.
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