Futures are the type of derivatives, which is a contract of sale, according to which one party must sell the underlying asset to the other party in the future at a price that has already been agreed upon now.
There are two types of futures:
- Physical delivery — those in which the delivery date of the asset is sold at the price fixed on the last trading date,
- Cash-settled (settlement) — these are futures in which settlement is made between the parties in the amount of the difference between the actual and contract price of the asset on the date of the contract execution. At the same time, the asset itself is not delivered.