Futures
Futures contract
Definition
A standardized, exchange-traded agreement to buy or sell an underlying at a set price, with settlement on a later date.
Example
Say you buy one crude oil futures contract, which covers 1,000 barrels, at $70 a barrel, posting margin rather than the full $70,000. If the price settles at $71 the next day, $1,000 is credited to your account, and a settlement at $69 would debit $1,000 instead. This daily settlement continues until you close the position or the contract expires.
Hypothetical numbers, for illustration only.
Also defined in
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