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Futures Contract​

A legally binding agreement to buy or sell a commodity at a certain price at a specified point in the future. Futures contracts, commonly referred to as futures, are an important tool in the financial sector. 

An agreement is made to trade a product like gold or palladium, for example, at a set price which is known as the 'forward price' at a certain point in the future known as the 'delivery date'. 

Because a futures contract is an agreement that is based on an underlying asset it is a 'derivative' product.