Futures contracts obligate both buyer and seller to transact at a set price on a future date. Unlike options, there is no choice — you must execute. Futures are used for commodities, currencies, indices, and more.
Answer: Buy at the agreed price on the specified date. Unlike options, futures are obligations — both sides MUST execute the trade at expiry.
Answer: A good-faith deposit to enter the futures position. Initial margin is a small percentage of the contract value held as collateral — futures offer high leverage.
Answer: Hedge equity portfolio exposure. Portfolio managers use S&P futures to quickly add or reduce market exposure without trading individual stocks.
Answer: Futures price is above the current spot price. Contango means futures trade at a premium to spot — common when storage costs or demand expectations are high.
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