Futures

A futures contract is an agreement to buy or sell a specific asset at a predetermined price on a specific future date. Unlike an option, both parties are obligated to go through with the transaction when the contract expires, there is no choice to walk away.

Futures are widely used to hedge against future price moves, for example a producer locking in a price for a commodity it will sell later, and are also heavily traded speculatively. Like other leveraged instruments, futures can produce losses larger than the initial amount put up to enter the contract.