#ETHBreaksATH
In this example:
Spot Contract: The company bought oil at a price of eighty $ today, so if the price rises after 3 months to 90$, it has gained 10$, but if it falls to 70$, it has lost 10$ compared to the market.
Futures Contract: The company agreed to buy oil after 3 months at a price of 82$. If the market rises to 90$, it gains 8$ (because it buys cheaper than the market), but if it falls to 70$, it loses 12$ (because it buys more expensive than the market).
🔹 The idea:
Spot contract = Execution now at the current price.
Futures contract = Future commitment that protects against price fluctuations but may cause a loss if the market moves against you.
🔹 It causes a loss if the market moves against you.