What is a futures contract?
Last updated: 12 August 2026
A futures contract is a financial agreement that obligates an investor to purchase – and another investor to sell – a specific asset at a predetermined price on a specific date, upon which it expires.
Futures are settled in one of two ways, depending on the characteristics of the specific contract: cash settlement or physical settlement.
The expiration date is the specific date on which the actual exchange of the underlying asset is due to occur. Futures contracts close on a monthly, bi-monthly, or quarterly basis.
It is possible to roll over the contract, which involves selling the current contract and buying a new contract with a later expiration date, maintaining exposure to the market.
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