A futures contract is a financial contractual obligation for the buyer to acquire assets (or for the seller to sell assets), functioning similarly to corresponding transactions with physical products or financial instruments, on a predetermined sale date and at an agreed-upon price. Futures contracts detail the quality and quantity of the underlying assets; they are standardized to facilitate trading on the futures exchange. Some futures contracts may have requirements for the physical delivery of the asset, while others are simply settled in cash. The futures market is characterized by the ability to utilize a very wide range of leverage compared to equity markets.

Futures can be used for hedging or speculating on the price movement of the underlying asset. For example, a grain producer may use futures to lock in a certain price and reduce risks (hedging). On the other hand, anyone can speculate on the price change of grain using short or long futures.