Futures

Futures are agreements to buy or sell something at a specified price at a future date. Investors usually buy futures to “speculate” on assets (for example, if an investor thinks the price of oil is going to go up, they might buy an oil future at a price agreed upon now – and if their prediction is correct they’ll be able to sell that future after the specified date for a profit) or to mitigate the risks of prices changing (for example, an airline may want to buy futures that allow it to buy oil at a future date but at a price agreed upon now to be able to better predict its costs).