Future

Futures contracts obligate both parties to complete the transaction at contract terms, unlike options which provide rights without obligations. They're standardized by exchanges for contract size, delivery date, and quality specifications, facilitating liquid secondary markets. Futures require margin deposits and daily mark-to-market settlements, with gains and losses settled daily. They're used for price discovery, hedging, and speculation across commodities, financial instruments, currencies, and indices. Futures enable price risk management for producers and consumers while providing leverage for speculators. Most contracts are closed before delivery through offsetting trades. Futures markets provide transparency, liquidity, and centralized clearing, reducing counterparty risk through clearinghouse guarantees.