What is a futures contract?
Learn about futures contracts and how they help a wide variety of professionals achieve financial success and avoid volatile price fluctuations.
Companies and individuals use futures contracts (also known as futures) to secure the current cost of something up to a certain date and time in the future. These contracts can be used for stock markets, currency values, and even interest rates. Learn more about what a futures contract is and how to use one with the following FAQs.
What does a futures contract do?
Futures lock in the price of something right now that you’ll buy or sell in the future. For example, some assets like oil, gas, or gold have volatile prices. This means the cost per unit of each fluctuates wildly over time. With a futures contract for oil, for example, you can secure a price in the present for the oil you want to buy later.
If you’re the seller, a signed futures contract means you’re legally obligated to provide an asset on a certain date in the future. And if you’re the buyer, the signed contract means you have to buy that asset on that date.
How are futures contracts and options contracts different?
Futures contracts can be long term or short term, and they can benefit both buyers and sellers. They’re often used to:
- Plan out budgets in advance
- Hedge price fluctuations
- Leverage price fluctuations for profit
Whether you’re an investor, a manufacturer, or a farmer, futures contracts could help you plan for your financial future and mitigate risks over time. Explore everything you can do with Adobe Acrobat Pro DC with e-sign today.