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Futures contract: Difference between revisions
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Amwelladmin (talk | contribs) (Created page with "''Adapted from [http://en.wikipedia.org/w/index.php?title=Futures_contract Wikipedia]''<br> In finance, a '''futures contract''' is a standardized contract between two...") |
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Unlike an [[option (finance)|option]], both parties of a futures contract must fulfill the contract on the delivery date. The seller delivers the underlying asset to the buyer, or, if it is a cash-settled futures contract, then cash is transferred from the futures trader who sustained a loss to the one who made a profit. To exit the commitment prior to the settlement date, the holder of a futures [[position (finance)|position]] can close out its contract obligations by taking the opposite position on another futures contract on the same asset and settlement date. The difference in futures prices is then a profit or loss. | Unlike an [[option (finance)|option]], both parties of a futures contract must fulfill the contract on the delivery date. The seller delivers the underlying asset to the buyer, or, if it is a cash-settled futures contract, then cash is transferred from the futures trader who sustained a loss to the one who made a profit. To exit the commitment prior to the settlement date, the holder of a futures [[position (finance)|position]] can close out its contract obligations by taking the opposite position on another futures contract on the same asset and settlement date. The difference in futures prices is then a profit or loss. | ||
===See also=== | |||
*{{eqderivprov|Futures Price Valuation}} under the {{2002eqderivdefs}}. | |||