Financial Terms / E - F / Futures

Futures

Futures are financial derivative products that obligate parties to buy or sell an asset at a future date for a given price. The buyer must buy, and the seller must sell the underlying asset at the predetermined price, regardless of the market's conditions and the asset's current price.

An example of a futures agreement is an agreement between an airline company and an aviation fuel producer to buy X liters of fuel at a given price. This contract helps both parties as the airlines aren't affected by sudden fluctuations in price, and the fuel company has regular orders at a fixed price.