LeoGlossary: Futures

A contract that obligates parties to buy and sell a certain amount of an asset at a particular future date and for a specified price. These are derivatives that are typically used to hedge risk.

The futures market has its origin in the commodities industry but expanded well beyond that. There is even futures trading on cryptocurrency, with Bitcoin and Ethereum both having markets.

Hedging is not the only option. Future contracts are often speculated upon. Like much of the financial industry, the original players are now just a small minority of those involved. The futures market is full of brokerage firms making transactions on behalf of their clients.

The scope of the futures market is such that it now has an impact on the price of the underlying securities or assets it represents. So even when not engaging in this market, it is best to have an understanding of how it operates and the impact it wields.

3 columns
2 columns
1 column
Join the conversation now