What are futures contracts in the stock market?
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In the stock market, Futures are derivatives contracts under which traders trade underlying assets on exchanges. Under the futures contract, traders must buy or sell the underlying asset on a fixed date, also known as the contract expiration date, at a fixed, predetermined price. Traders can speculate and set the underlying assets’ prices while entering into the contract. They are obligated to honour the contract rules and buy/sell the asset even if the trade does not pan out per their expectation or speculation on the contract expiry date.