Futures contracts

An agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date. A futures contract obligates the buyer to purchase the underlying commodity and the seller to sell it, unless the contract is sold to another before settlement date, which may happen if a trader waits to take a profit or avoid a loss. This contrasts with options trading, in which the option buyer may choose whether or not to exercise the option on the exercise date

Added: January 2014