futures trading

What are Index Futures?

Future contracts originate from commodity trading. A future contract is an obligation to buy/sell a particular quantity of commodity at a specific date for a certain price determined at the outset of the contract. Future contracts are regularly employed for hedging risks and also for speculation.

To Illustrate, with the recent hike in oil prices, an airline company which uses a great deal of fuel may wish to hedge it’s exposure to oil prices through the purc…