Glossary · from the DESK dictionary
Futures Contract
A standardized, exchange-traded agreement to buy or sell an underlying at a set price on a future date.
In plain words
A binding contract for a future purchase/sale, but on terms fixed today — unlike an option, it's an obligation, not a choice.
In more detail
Futures are cleared through a clearinghouse that acts as the counterparty to both sides, eliminating counterparty risk. Positions are revalued daily via mark-to-market.
Example
A farmer sells a wheat future to lock in today's price for a harvest three months from now.
What it means for traders
A fundamental tool for hedging and speculative trading across virtually every asset class.
Common pitfalls
High leverage from low margin requirements can sharply amplify losses (and gains).
Related terms
Back Months · Basis Risk · Bond Futures · CFTC (Commodity Futures Trading Commission) · Clearinghouse · CME (Chicago Mercantile Exchange) · Contract Specification · Delivery Month · Derivative · E-Mini Futures · Eurex · Exchange for Physical (EFP) · First Notice Day · Forward Contract · Forward Market · Futures Basis · Futures Clearing · Futures Commission Merchant (FCM) · Futures Exchange · Futures Option · Futures Spread · Forward Trading · Hedger vs. Speculator · Initial Margin · Interest Rate Futures · Mark-to-Market · Physical Delivery · Rollover · Spot-Futures Parity Theorem (Cost-of-Carry Model) · Forward Transaction · Tick Size and Tick Value
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.