Futures contracts are a popular type of financial derivatives that represent an agreement between a buyer and a seller to exchange a specific asset (such as stocks and Bitcoin) at a predetermined price on a specified future date.
Futures contracts are used as a way to hedge against price risk and/or speculate on market movements.
As per a futures contract, the buyer is obligated to purchase the underlying asset at the agreed-upon price on the specified date, regardless of the current market price.
The seller, in turn, is obligated to sell the underlying asset at the agreed-upon price on the specified date. The difference between the agreed-upon price and the actual market price is settled between the buyer and seller when the contract reaches expiration.
