futures contract
Plural
futures contracts
1
an agreement to buy or sell goods or assets at a predetermined price but delivered and paid for at a later time
- Farmers often use a futures contract to lock in a price for their crops ahead of the harvest, protecting themselves against price fluctuations in the market.
- An airline company might enter into a futures contract to purchase jet fuel at a fixed price, helping to manage costs and budget more accurately.
- Investors use futures contracts to speculate on the future price of commodities like gold or oil, aiming to profit from price movements.
- A multinational corporation could use futures contracts to hedge against currency exchange rate risks when planning future international transactions.
- Futures contracts are commonly traded on exchanges such as the Chicago Mercantile Exchange, where traders can buy and sell contracts based on the future prices of various financial instruments.