Future

A futures contract is traded on an exchange and defines an underlying asset to be exchanged for a specified price at a future date (usually a designated month).

• defines underlying asset, price, date of exchange
• traded on an exchange
• short and long positions
• minimized counter party risk via broker and daily fixing

In contrast to a forward, a futures contract is traded on an exchange. This reduces the risk of a counter party default and provides increased liquidity.