$BTC
Futures contracts are legal agreements to buy or sell specific assets (such as commodities, currencies, or securities) at a predetermined price on a future date. Futures contracts are primarily used as a tool for hedging against price fluctuations or as a means of speculation.
**Key characteristics of futures contracts:**
1. **Future delivery**: The delivery date is set in the future, when the assets are exchanged on that date.
2. **Agreed price**: The price is set when the contract is signed, allowing the parties to lock in a specific price.
3. **Trading on exchanges**: Futures contracts are often traded in specialized markets, providing a level of regulation and transparency.
4. **Legal obligation**: Contracts are legally binding, meaning that the parties are obligated to complete the transaction according to the agreed-upon terms.
Futures contracts are commonly used in financial markets to reduce the risks associated with price fluctuations. If you have additional questions about this topic, feel free to ask!