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Futures Contract Definition

A futures contract is a standardized agreement to buy or sell an asset at a set price on a specific future date, traded on an exchange.

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What is a Futures Contract?

Futures are used for both hedging and speculation across commodities, indices, currencies, and interest rates.

Unlike forwards, futures contracts are standardized and settled through a regulated exchange.

Example of Futures Contract

A trader agreeing today to buy oil at $70 per barrel for delivery in three months is using a futures contract.

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