Meaning and contract terms
A futures contract is a standardized agreement linked to future delivery of an underlying asset or cash settlement under specified terms. For an exchange-traded instrument, the specification, contract size, settlement date and margin mechanism matter. An economic position may arise without paying the full value of the underlying asset when the trade is opened.
Margin and adverse price movements
If an investor opens a position and the price moves against it, the clearing system may require additional funds or lead to the position being closed under the intermediary’s rules. Initial margin therefore cannot be treated as a predetermined maximum loss. For a deliverable contract, it is also important to understand the consequences of keeping the position until settlement.
Not a share purchase or an option
A futures contract is not an ordinary purchase of a share and is not the same as an option: the parties assume corresponding obligations rather than merely acquiring a right to choose. The ability to close a position quickly depends on the market and trading terms. Before a trade, check costs, liquidity and margin scenarios, including sharp movements and limited trading availability. Related entries: [futures and options](/guides/futures-and-options/), [option](/glossary/opcion/) and [leverage](/glossary/kreditnoe-plecho/).