Futures Contract Definition | Becker

Accounting Dictionary

Futures Contract

An agreement between two parties to exchange a commodity or currency at a specified price on a specified future date. One party takes a long position and agrees to buy a particular item, while the other party takes a short position and agrees to sell that item. Unlike an option, both parties are obligated to perform according to the terms of the contract. Futures contracts are made through a clearinghouse and have standardized notional amounts and settlement dates.

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