Futures refer to derivative financial contracts indicating transactions of an asset at a set future date and price. This means that both parties must buy or sell the asset on the agreed conditions regardless of the current market price at the expiration date.

Futures trading are held on a futures exchange where contracts are standardized with the number of the underlying asset clearly indicated. Futures contracts allow a trader to speculate on the direction of an asset.

Futures are significantly used to hedge the price movement of the underlying asset to alleviate unwanted losses from sudden or unfavorable changes in price.