Futures contract
A standardized contract obliging parties to buy or sell an asset later under specified terms.
Plain languagePractical exampleConnected reading
01
What is it?
A standardized contract obliging parties to buy or sell an asset later under specified terms.
02
Why does it matter?
It supports hedging and price discovery while leverage and daily settlement can amplify risk.
03
How should it be read?
Review contract size, expiry, settlement, margin and basis.
04
Common mistake
Mistaking posted margin for the maximum possible loss.
A simple example
For a 100-unit contract, a two-unit move creates a 200-unit gain or loss regardless of margin posted.