Futures contracts are contracts to buy or sell certain items by a certain expiration date at a pre-determined future price. This could include such items as agricultural products (e.g., corn, coffee, and cotton), oil, precious metals, and financial instruments. Investors don't typically take possession of the items under the contract; rather, they close out their position before the contract ends. Futures contracts are considered a high-risk/high-reward investment and should be considered only by savvy investors who fully understand the process of investing in futures and the risks involved. Some futures investors are speculators hoping to profit from market price swings, while others are hedgers who use futures contracts as a hedge against low prices for the items under contract (e.g., farmers who grow crops).
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