#ETHBreaksATH Futures Contracts are binding financial agreements between two parties (buyer and seller) to purchase or sell a specific asset (such as oil, gold, wheat, or even indices and stocks) at a predetermined price and on an agreed future date.

🔹 Key Features of Futures Contracts:

Standardization:

Contracts are executed on organized exchanges (such as CME or ICE) and are standardized in terms of size, expiration date, and type of asset.

Margin:

The full value of the contract is not paid upfront; both parties are required to deposit an initial margin as collateral, with daily settlement of profits and losses (Mark-to-Market).

Legal Obligation:

Unlike options contracts, futures contracts legally obligate the buyer to buy and the seller to sell at expiration (unless they are settled before the due date).

Uses:

Hedging: Protecting companies and investors from price fluctuations (such as airlines using it to lock in fuel prices).

Speculation: Making profits from future price differences.

Arbitrage: Taking advantage of price differences between different markets.

Settlement:

Either through physical delivery (delivering the agreed asset).

Or through cash settlement (paying the difference between the agreed price and the market price.