Futures Contract

A futures contract is an agreement to buy or sell something at a set price on a specific future date. Unlike stocks, you're not buying the actual asset itself—you're betting on what its price will be. You'll encounter futures in commodities (oil, wheat, gold) and financial indexes, and they matter because they let traders profit from price movements without owning the underlying asset, though they also carry higher risk. For example, a trader might buy a wheat futures contract betting the price will rise by harvest time, then sell it for a profit before the delivery date arrives. Futures require margin (a deposit), so small price swings can mean big gains or losses.