A simple definition of futures contracts 🧐🔍?
Futures contracts are agreements to buy or sell a specified quantity of a particular commodity at a specified date in the future at a pre-agreed price. The futures market originated in the commodities industry, where farmers, miners, and oil producers wanted to manage the risk of future price fluctuations for their products. In a futures contract, the seller agrees to deliver the commodity in the future according to the agreed terms, while the buyer agrees to pay the agreed price at the expiration of the contract. The price of the contract depends on supply and demand in the market.