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A futures contract is a standardized agreement to buy or sell an asset at a set price on a future date, traded on exchanges for hedging or speculation.
A futures contract is a legal agreement to buy or sell something in the future at a price decided today.
It is standardized (quantity, quality, date are fixed by the exchange).
It is traded on organized exchanges like NSE, BSE, or CME.
Both buyer and seller are obligated to complete the deal on the future date.
You don’t need to actually receive the product — most contracts are settled by paying the price difference.
Why people use futures:
Hedging – To protect against price changes
Example: A farmer locks today's price to avoid loss if crop prices drop.
Speculation – To profit from future price movement
Example: A trader buys a futures contract expecting the price to go up
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