forward contract

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Related to Forward Contracts: Futures contracts, Options Contracts, Forward Currency Contracts

Forward contract

A contract that specifies the price and quantity of an asset to be delivered in the future. Forward contracts are not standardized and are not traded on organized exchanges.

Forward Contract

An agreement to buy or 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 a certain number of bushels of B's corn at $15 per bushel. This contract must be honored whether the price of corn goes to $1 or $100 per bushel. Forward contracts can help reduce volatility in certain markets, but they contain the risks inherent to all speculative investing. These contracts may be sold on the secondary market, but the person holding the contract at its end must take delivery of the underlying asset. Forward contracts are identical to futures contracts except that their provisions are not standardized. That is, forwards may be written with any provisions the parties desire. While this allows for greater flexibility, this makes the contracts less liquid on the secondary market and prevents them from being traded on an exchange.

forward contract

An agreement between two parties to the sale and purchase of a particular commodity at a specific future time. Although forward contracts are similar to futures, they are not easily transferred or canceled. Thus, they are not liquid.

Forward contract.

A forward contract is similar to a futures contract in the sense that both types of contracts cover the delivery and payment for a specific commodity at a specific future date at a specific price.

The difference is that a futures contract has fixed terms, such as delivery date and quantity, and it's traded on a regulated futures exchange.

A forward contract is traded over the counter and all details of the contract are negotiated between the counterparties, or partners to the agreement.

The price specified in the forward contract for foreign currency, government securities, or other commodities may be higher or lower than the actual market price at the time of delivery, known as the spot price.

But the participants have locked in a price early specifically so they know what they will receive or pay for the product, eliminating market risk.

forward contract

References in periodicals archive ?
Forward Contract -- A forward contract is a non-standardized contract between two parties to buy or sell an asset at a specific price at a certain future date.
A spot exchange should not offer forward contracts but NSEL was offering T+ 2 and T+ 25 contracts and also T+ 2 and T+ 35 contracts.
Colin Ciesyznski (Senior Market Strategist at CMC Markets) describes below a possible strategy of trading oil via forward contracts and pairs trading .
The bonds and forward contract sales appear to many to represent a desperate effort to raise capital now that Iran is largely cut off from international markets.
Forward contracts and marketing agreements allow packers and producers to coordinate supply and reduce risk, but, according to Lummis, when they are negotiated in secret, all of the bargaining power is on one side.
Unlike forward contracts, these are standardised and can be traded on exchanges.
You may lock in to a fixed rate by booking a forward contract.
When purchasing a forward contract, clients will be required to pay a 10 per cent deposit at the time of the booking and the 90 per cent balance on maturity of the contract.
Forward contracts are the same as future contracts but are not regulated by organized exchanges.
Currently, the airline is hedging around 20% of its annual kerosene requirement with forward contracts.
This item briefly examines the definition of a foreign currency contract and, in particular, whether the definition includes foreign currency forward contracts entered into between nonbank counterparties.
The airline's troubles began when its treasury group executed a simple and widely accepted hedging strategy of locking in future long-term currency exposures with forward contracts (purchase U.