Stock Market Glossary letter F

Futures Contracts – Futures Contracts are a class of financial derivatives that oblige the purchaser to pay for a certain commodity or security at a set price on a specified settlement (or delivery) date.

Futures TradingFutures trading involves the buying and selling of forward contracts specifying the amount, type and delivery date of a certain commodity. The majority of futures trades do not result in the actual delivery of the specified commodity. Rather, these forward commodity contracts are bought and sold with positions frequently being hedged.

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