futures contract
/ˈfjuːtʃərz ˈkɒntrækt/
an agreement to buy or sell an asset at a predetermined price on a specific future date
futures contract in a sentence
“Farmers use futures contracts to lock in crop prices before harvest.”
Origin of futures contract
Latin futurus about to be + contractus drawn together
Related Words
leverage
the use of borrowed capital to amplify potential returns — and potential losses
call option
a contract giving the buyer the right, but not obligation, to purchase shares at a set price before expiration
put option
a contract giving the buyer the right, but not obligation, to sell shares at a set price before expiration
strike price
the predetermined price at which an option holder can buy or sell the underlying asset
premium
the price paid to purchase an options contract
implied volatility
the market's forecast of likely future price movement, derived from current option prices