Buy | Futures Contract Example

Buying a futures contract does not require paying the full value of the asset upfront. Instead, you post a , which is a small fraction (typically 3–12%) of the contract's total "notional" value.

The manufacturer buys one corn futures contract (covering 5,000 bushels) at the current futures price of $5.00 per bushel . buy futures contract example

Imagine a cereal manufacturer that needs 5,000 bushels of corn in three months. They fear corn prices will rise, which would hurt their profit margins. Buying a futures contract does not require paying

Every contract specifies the exact quantity and quality of the asset (e.g., one crude oil contract covers 1,000 barrels). you post a