Futures Market

Futures market

A market where contracts for future delivery of a commodity or a financial instrument are bought or sold.

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Futures Market

The supply and demand for the trading of futures contracts. A futures contract is an agreement to buy and sell an asset at a certain date at a certain price. That is, Investor A may make a contract with Farmer B in which A agrees to buy so many bushels of B's corn at $15 per bushel. This contract must be honored whether the priceof corn goes to $1 or $100 per bushel. Futures contracts can help reduce volatility in certain markets, but they contain the risks inherent to all speculative investing. These contracts may be traded on the secondary market, creating the futures market. The investor holding the contract at its end must take delivery of the underlying asset. Trading on the futures market often occurs on a futures exchange, such as the Merc.

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futures market

A market in which futures contracts are bought and sold. The various organized futures exchanges specialize in certain types of contracts. For example, corn, oats, soybeans, and wheat are traded on the Chicago Board of Trade, while the Commodity Exchange in New York handles trades in copper, gold, and silver. Other futures markets include the Chicago Mercantile Exchange, the Coffee, Sugar and Cocoa Exchange, the International Monetary Market, the Kansas City Board of Trade, the Minneapolis Grain Exchange, the New York Cotton Exchange, the New York Futures Exchange, and the New York Mercantile Exchange.