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Quantitative Finance · Glossary

What is Futures contract?

Definition 18.1 Markets I: The Ecosystem and Exchange-Traded Markets · Chapter 18 — Futures Contracts and Their Exchanges

A futures contract is a standardised agreement, listed by an exchange and guaranteed by its clearing house (Chapter 5), to buy or sell a specified quantity of an underlying at a specified future date, at a price agreed today. Gains and losses are settled in cash every day; at expiry the contract is either settled in cash against a reference price or by delivery of the underlying.

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