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A standardized legal agreement to buy or sell an asset at a predetermined price at a specified time in the future, traded on exchanges.
Futures contracts exist for commodities (oil, gold, wheat), financial instruments (stock indices, bonds), and currencies. Unlike options, futures create an obligation to buy or sell, not merely a right. A corn farmer might sell futures to lock in a price of $5 per bushel for delivery in September, protecting against a price decline. Futures are highly leveraged, with margin requirements often only 5-15% of the contract value. S&P 500 futures (ES contracts) are among the most liquid financial instruments in the world, trading nearly 24 hours a day.