what is futures trading 
futures are contracts to buy or sell a specific underlying asset at a future date the underlying asset can be a commodity a security or other financial instrument futures trading requires the buyer to purchase or the seller to sell the underlying asset at the set price whatever the market price at the expiration date futures trading commonly refers to futures whose underlying assets are securities in the stock market these contracts are based on the future value of an individual company s shares or a stock market index like the s p 500 dow jones industrial average or nasdaq 1 futures trading on exchanges like the chicago mercantile exchange can include underlying assets like physical commodities bonds or weather events 2underlying assetsfutures traders can lock in the price of the underlying asset these contracts have expiration dates and set prices that are known upfront stock futures have specific expiration dates and are organized by month the underlying assets in futures contracts may include 3the buyer of a futures contract must take possession of the underlying stocks or shares at the time of expiration and not before buyers of futures contracts may sell their positions before expiration there is a difference between options and futures american style options give the holder the right but not the obligation to buy or sell the underlying asset any time before the expiration date of the contract 4