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A futures contract is an agreement to buy or sell
a specific amount of a specific commodity or financial instrument at
a stipulated price on a particular date in the future. Commodities
can include bonds, currencies, or stocks. Unlike options futures
convey an obligation to buy. The future date is called the delivery
date or final settlement date. The pre-set price is called the
futures price. The price of the underlying asset on the delivery
date is called the settlement price.
To exit the commitment, the holder of a futures
position has to sell his long position or buy back his short
position, effectively closing the position.
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