What is means of Future contracts? How does works future contracts?

  Can you see the future? Well, boy, do we have the perfect investment for you Futures contracts? When you buy a stock, you instantly own that stock for the price you paid. When you buy a future, you're buying an agreement that states that you will buy or sell an asset at a certain price at a certain time in the future. The benefit to this is that the futures contract stands regardless of how the price of the underlying stock or asset fluctuates. It essentially guarantees you a rate to buy something down the line regardless of market fluctuations along the way. So what can you buy futures contracts on? Anything from physical commodities like oil, or even financial instruments like stocks or indexes. Futures contracts are standardized to facilitate easy trading on something called a futures exchange. And there's a variety of reasons investors might buy a future, like hedging their bets or speculating on markets. So in summary, futures are contracts that obligate buyers or sellers to transact on an asset at a date in the future at an agreed upon price. Futures contracts allow investors to bet or speculate on securities and commodities. Futures also let investors protect themselves from volatility in the market, letting them hedge their bets against an underlying asset that they may own.

 Futures have expiration dates and set prices. Futures contracts are generally identified by their expiration date. So you might buy a future for December of this year with a set price for an asset, say crude oil. That contract means that whoever holds it at the expiration date agrees to the transaction contained therein. There are a ton of types of futures though Commodity Futures Or oil and things like grain or wheat stock index futures, say for the Dow or the NASDAQ, currency futures for currencies like the dollar or the pound, metal futures for elements like gold or silver, and treasury futures for bonds and other financial products. If you're a little experienced with the stock market, you might at this point be confused about how futures are different from options. 

Options allow the holder the right to buy or sell an asset at their expiration date, but it's ultimately the holders choice when the options expire. Futures, however, obligate the holder to buy or sell the asset when they expire. Options have options. Futures are set in stone. If you check on markets every night before they open, you will often see the futures price represented. This will give investors an idea of where the market will open the next day or when the markets do open soon.

 Futures themselves are traded on futures exchanges, which are essentially just the markets they sell on. The exchange determines how a futures contract is settled, whether you have to physically take delivery of the asset, or whether you can just settle it out in cash. Most futures are bought and sold by traders speculating on the assets, meaning they never have the intention to take delivery of the asset their futures represent. In these cases, the futures are just cashed out when they expire, meaning that however the price has changed, the traders either pay up or get paid based on their contract. Aside from speculation, futures are also used by investors to hedge their investments. This essentially means the investor buys a future to protect them from gains or losses in the asset down the line. In this case, they likely own the asset that they're buying the futures contract for. A corn farmer might buy a futures contract to make sure they can sell their crop down the line for the price that they want, it reduces risk and it may guarantee them profit and that is essentially what a futures contract is.