What are futures contracts?

Futures contracts are legally binding agreements to buy or sell a specific asset, such as a commodity or financial instrument, at a predetermined price and date in the future. They are standardized contracts that trade on exchanges, and the buyer and seller are obligated to complete the transaction on the specified date, regardless of the current market price of the asset. Futures contracts are commonly used by market participants to manage price risk, speculate on future price movements, or gain exposure to a particular asset class.