What are futures?

What are 'Futures'. Futures are financial contracts 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...

How do futures contracts work?

1 Investors can use futures contracts to speculate on the direction in the price of an underlying asset. 2 Companies can hedge the price of their raw materials or products they sell to protect against adverse price movements. 3 Futures contracts may only require a deposit of a fraction of the contract amount with a broker. More ...

Can you trade futures for profit?

Futures contracts can be traded purely for profit, as long as the trade is closed before expiration. Many futures contracts expire on the third Friday of the month, but contracts do vary so check the contract specifications of any and all contracts before trading them.

When do futures contracts expire?

Many futures contracts expire on the third Friday of the month, but contracts do vary so check the contract specifications of any and all contracts before trading them. For example, it is January, and April contracts are trading at $55.