Futures contract has a particular significance in relation to IG's platform. Here, we define futures contract in general investing and explain what it means to you when trading with IG.
Futures contracts represent an agreement between two parties to trade an asset at a defined price on a specified date in the future. They are also often referred to simply as ‘futures’.
Most futures contracts are traded on exchanges. All futures contracts have an expiry date: the date at which the underlying asset has to be delivered (at least in theory). They differ in this respect from ‘spot’ prices, which reflect the price of a market if the trade were to be completed that day.
Futures contracts are standardized, and specify the quality and quantity of the underlying asset. They are often used to hedge against other trades, as well as for speculation.