Financial Derivatives - Futures

A Future is a contract to buy or
sell a standard quantity and quality of an
asset or security at a specified date and price.

Futures are similar to Forward Contracts,
but are standardized and traded on an exchange,
and are valued daily. The daily value provides
both parties with an accounting of their financial
obligations under the terms of the Future.

Unlike Forward Contracts,
the counterparty to the buyer or seller
in a Futures contract is the clearing corporation
on the appropriate exchange.

Futures often are settled in cash or
cash equivalents, rather than requiring physical
delivery of the underlying asset.