Posted by: cffm | May 21, 2013

Futures Contracts – Commodity Challenge Tuesday Tip

A futures contract is a contract to deliver or take delivery of a commodity in some future month at a price determined by auction in an organized commodity exchange. The auction once occurred in a trading pit, but most trading has migrated to electronic platforms. The terms of a futures contract — delivery time, grade, and place are standardized by the exchange. The only thing negotiated between buyer and seller is price.

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