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Glossary
Instruments

Futures

A binding agreement to buy or sell something at a set price on a set date.

Unlike an option, a future is an obligation, not a choice. Both sides must perform. They are settled daily, so gains and losses hit your account every day, which is how margin calls arrive quickly.

They are the primary hedging tool for producers and consumers of commodities, and a heavily leveraged speculative instrument for everyone else.

Figure

The fee you never see

Ask 100.06, you buy hereBid 100.00, you sell hereThe spread. That is the fee.

You buy at the ask and sell at the bid, so you are down the spread the instant you trade. In an illiquid stock it dwarfs any commission you thought you were avoiding.

Why it matters

Futures prices are where the market's expectations about commodities and rates are most visible.

The mistake everyone makes

Underestimating the leverage. Futures typically require only a small fraction of the contract value as margin.

Related terms

Derivative
A contract whose value is derived from something else.
Hedge
A position taken to offset a risk you already have.
Margin call
Your broker demanding more money, at the worst possible moment.

See Futures on a real company

SteadyShares pulls this straight from the filings for 1,100+ companies, alongside moat scores, DCF fair value and peer comparison. Free to look around.

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