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What is a future contract in the Stock Market?




Futures contract is a contract to trade at a specified price at a future date. Futures are a type of derivative that is not trade on populations of itself, but a contract to trade stocks. Futures are not traded in the stock market, futures are traded on the futures market.

The date specified

The purchase of a future does not mean that you have bought or sold shares, but it does mean you are obligated to buy or sell shares at the price specified in the specified date. It is more common to see commodity futures than it is to see stock futures. So, technically, the future means nothing in the stock market because the futures are traded in its own market, not the stock market.

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