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What is Futures contract？The definition and the origin of the contract
A futures contract is a contract between two parties where both parties agree to buy and sell a particular asset of a specific quantity and at a predetermined price at a specified date in the future.
The predetermined price the parties agree to buy and sell the asset for is known as the forward price. The payment and delivery of the asset is made on the future date termed as delivery date.The assets that both parties agree to exchange are called "Underlying assets".
The buyer in the futures contract is known to hold a long position or simply long. The seller in the futures contracts is said to be having a short position or simply short.
2.The origin of futures contract
Futures contracts are uniformly formulated by the futures Exchange, A standardized contract that provides for the delivery of a certain quantity and quality of goods at a specific time and place in the future. Traders can hedge against risk of prices and get risk returns by trading contracts.
Futures contract is developed on the basis of Spot contract and Forward contract, the basic difference between them is the standardization of Futures contract terms, Futures contract become universal with the standardization of The quantity, quality and the delivery level of underlying assets as well as the rate of premium and discount of Substitutes, deliver location, deliver date. Futures price is the only variable made by open bidding in Exchange in futures contract.
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