|Glossary Term: FUTURES CONTRACT|
Definition(s) for FUTURES CONTRACT:
1. ) In the municipal market, this term refers to an arrangement to purchase or sell the municipal bond index (The Bond Buyer 40-Bond Index) for delivery in the future.
2. ) A legallybinding agreement, made on the trading floor of a futures exchange, to buy orsell a commodity or financial instrument sometime in the future. Futurescontracts are standardized according to the quality, quantity, and deliverytime and location for each commodity. The only variable is price, which isdiscovered on an exchange trading floor. Futures Exchange A centralmarketplace with established rules and regulations where buyers and sellersmeet to trade futures and options on futures contracts.
3. ) Agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price in a stipulated future month. The price is established between buyer and seller on the floor of a commodity exchange, using the open outcry system. A futures contract obligates the buyer to purchase the underlying commodity an the seller to sell it, unless the contract is sold to another before settlement date, which may happen if a trader waits to take a profit or cut a loss. This contrasts with options trading, in which the option buyer may choose whether or not to exercise the option by the exercise date. See also Futures Market.
4. ) A standardized contract calling for the delivery of a specified quantity of a commodity at a specified date in the future.