Futures contract

A financial derivative in the form of a standardized, legally binding contract for the purchase or sale of a commodity of a fixed quantity and quality on a specified future delivery date. – The standardization of contracts enables them to be easily transferred on financial or commodity futures exchanges. – Forward contracts are classified as (financial) derivatives because they depend on the performance of the underlying asset. The basic forms are options and futures or forwards. – In the case of forward transactions, there is a time lag between the obligation and the performance transaction. For this reason, the parties must deposit a margin in the margin account of the futures exchange or with the broker when the contract is concluded (margin cover); unless they execute hedged transactions, such as the sale of a call option on shares in their own possession. – See disclosure requirement, Bund futures call, futures, put, counterparty, central, option, position, weak, commodity price risk, commodity futures contract, spot market, strike price, TED spread, futures exchange, futures transaction in the narrow sense, futures speculator, availability premium, substitutability, commodity futures contract, replacement risk.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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