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Futures Trading: What It Is, How It Works, Factors, and Pros & Cons

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18-09-2025 - 08:57:09
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What Is Futures Trading?

Futures are contracts to buy or sell a specific underlying asset at a future date. The underlying asset can be a commodity, a security, or another financial instrument. Futures trading requires the buyer to purchase and the seller to sell the underlying asset at the set price, regardless of the market price, at the expiration date.

"Futures trading" commonly refers to futures whose underlying assets are securities in the stock market. These contracts are based on the future value of an individual company’s shares or a stock market index like the S&P 500, Dow Jones Industrial Average, or Nasdaq.1 Futures trading on exchanges like the Chicago Mercantile Exchange can include underlying “assets” like physical commodities, bonds, or weather events.

Source >> https://www.investopedia.com/terms/f/futures.asp

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