fu⋅ture
[fyoo-cher] 
| 1. | time that is to be or come hereafter. |
| 2. | something that will exist or happen in time to come: The future is rooted in the past. |
| 3. | a condition, esp. of success or failure, to come: Some people believe a gypsy can tell you your future. |
| 4. | Grammar.
|
| 5. | Usually, futures. speculative purchases or sales of commodities for future receipt or delivery. |
| 6. | that is to be or come hereafter: future events; on some future day. |
| 7. | pertaining to or connected with time to come: one's future prospects; future plans. |
| 8. | Grammar. noting or pertaining to a tense or other verb formation or construction that refers to events or states in time to come. |
1325–75; ME futur AF, OF < L fūtūrus about to be (fut. participle of esse to be)
Based on the Random House Dictionary, © Random House, Inc. 2009.
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| fu·ture (fyōō'chər) n.
[Middle English, from Old French futur, from Latin futūrus, about to be; see bheuə- in Indo-European roots.] |
Copyright © 2009 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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futures
A contract to buy or sell a specified amount of a commodity or financial instrument at an agreed price at a set date in the future. If the price for the commodity or financial instrument rises between the contract date and the future date, the investor will make money; if it declines, the investor will lose money. The term also refers to the market for such contracts.
Copyright © 2005 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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Futures
A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. The futures markets are characterized by the ability to use very high leverage relative to stock markets.
Futures can be used either to hedge or to speculate on the price movement of the underlying asset. For example, a producer of corn could use futures to lock in a certain price and reduce risk (hedge). On the other hand, anybody could speculate on the price movement of corn by going long or short using futures.
Investopedia Commentary
The primary difference between options and futures is that options give the holder the right to buy or sell the underlying asset at expiration, while the holder of a futures contract is obligated to fulfill the terms of his/her contract.
In real life, the actual delivery rate of the underlying goods specified in futures contracts is very low. This is a result of the fact that the hedging or speculating benefits of the contracts can be had largely without actually holding the contract until expiry and delivering the good(s). For example, if you were long in a futures contract, you could go short the same type of contract to offset your position. This serves to exit your position, much like selling a stock in the equity markets would close a trade.
Related Links
Futures Fundamentals
Becoming Fluent in Options on Futures
Interpreting Volume for the Futures Market
Getting Started in Foreign Exchange Futures
See also: Commodity, Delivery, Futures Contract, Futures Market, Hedge, Leverage, Long (or Long Position), Option, Short (or Short Position), Underlying
Also spelled: Future
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