A standardized agreement to buy or sell a specific asset at a predetermined price on a future date. Both the buyer and seller are obligated to complete the transaction when the contract expires.
You buy a crude oil futures contract agreeing to buy 1,000 barrels at $80 per barrel in three months. When the contract expires, you must complete the purchase at $80 per barrel, regardless of whether the market price is higher or lower at that time.
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