Scroll Top



    Introduction to futures

    A futures contract is a predetermined contract on the present date made between two parties that don’t know each other, to transact a commodity or a financial instrument at a set price on a future date. This contract comes into force despite the present circumstances. The commodity’s delivery and payment is made on the futures date at the predetermined price. A buyer in such a contract is called ‘having a long position’ or in the ‘long,’ while the seller is said to be in the ‘short.’

    Understanding Futures

    • A futures contract specifies the details of the transactions to be held, thereby standardizing on a futures exchange where the transaction occurs on the agreed date. Such a contract enables the investor to speculate the direction of the price of that commodity or instrument, thereby hedging the price. If the price of the agreed asset class seems set to fall or will be unfavourable, the investor will be making a profit due to the pre-agreed price, or vice versa.
    • Futures are derivative financial contracts that can be made on stocks, commodities, indices, metals like gold and silver, bonds, currencies and more. The buyer and seller are entering an obligation to buy and sell the asset on the agreed date at the price decided respectively.
    • Trading with futures trading eliminates the necessity to own the underlying asset i.e. you don’t need to own the asset if you are the buyer, not until the date of expiration comes. If you don’t want to hold that obligation, you can rid yourself of it before the expiration as well. These contracts are always carried out on a mass scale of quantity, which demands a deposit as a margin with the broker. Minimal margins ensure that if the price is favourable, the profits are huge. In case they’re not, then you won’t also lose too much money.

    Highlights of Futures

    • Margins are leverages in these contracts.
    • Futures markets fluctuate violently on a daily basis, and with the margin, investors can continue to chase prices favourable to them and square up on contracts for various durations.
    • Contracts can be replenished time whenever the margins are used up to settle the daily price differences in the market.

    Popular Topics

    Latest Articles

    Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

    Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

    CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

    Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

    Cleartax is a product by Defmacro Software Pvt. Ltd.

    Company PolicyTerms of use


    ISO 27001

    Data Center


    SSL Certified Site

    128-bit encryption