$ETH To understand the price of a futures ETF, it is crucial to first understand what ETFs and futures are separately, and then how they are combined:
**What is an ETF?**
* An ETF (Exchange Traded Fund) is a publicly traded investment fund, similar to a stock.
* ETFs track the performance of an index, sector, commodity, or other asset.
* They offer diversification, accessibility, and low costs compared to other investment vehicles.
**What are Futures?**
* A futures contract is an agreement to buy or sell an asset at a predetermined price on a future date.
* Futures are used to speculate on price movements or to hedge risk.
**Futures ETF**
* A futures ETF invests in futures contracts rather than underlying assets.
* The price of a futures ETF is influenced by:
* The price of the underlying asset of the futures contract.
* The market's expectations about the future price of the asset.
* The cost of "rolling over" futures contracts as they expire. A key difference between a spot ETF and a futures ETF is that:
* Spot ETFs reflect the actual, current price of an asset.
* Futures ETFs reflect an agreed-upon price between the seller and buyer for a given asset. This allows investors to speculate on the price of such assets.