What is futures trading?

Futures trading is facilitated by futures exchanges, like the Chicago Mercantile Exchange (CME), and requires investors to have an approved brokerage account. When traders or companies enter a futures contract, it obliges them to sell or buy the underlying assets at a set price and date in the future.

What is a futures contract?

Futures can be used for hedging or trade speculation. Futures are derivative financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and set price. A futures contract allows an investor to speculate on the price of a financial instrument or commodity.

When do futures expire?

Futures are identified by their expiration month. For example, a December gold futures contract expires in December. Traders and investors use the term futures in reference to the overall asset class. However, there are many types of futures contracts available for trading including:

What are livestock futures?

Livestock futures are commodities that include live animals used in food processing and meat product distribution. Livestock futures contracts offer exposure to price fluctuations. For example: Lean Hogs. There are mainly two types of financial futures: index contracts and interest rate (debt) contracts.