Futures Contracts and Exchange Trading

What is a key characteristic of a futures contract?

What is a restriction on trading futures contracts?

What is a feature of the terms of a futures contract?

Why are futures contracts traded on an exchange?

What is a benefit of the standardization of futures contracts?

What is a common aspect of settlement in futures contracts?

What determines the quality of a commodity in a futures contract?

What is the primary purpose of a futures exchange?

What is a key aspect of the quantity of goods in a futures contract?

What is the currency of a futures contract typically denominated in?

Futures Contract Trading

Futures contracts are traded on a futures exchange, subject to the exchange's rules and regulations.
Standardization of the futures contract facilitates secondary market trading.

Key Characteristics of Futures Contracts

Relates to a specific quantity of the underlying asset.
Only whole contracts can be traded.
Trading of fractional contracts is not allowed.
Terms of the futures contract are non-negotiable.

Futures Contract Characteristics

Futures contracts are traded on a futures exchange, subject to the exchange's rules and regulations.
Standardization of futures contracts enables secondary market trading.
Futures contracts relate to a specific quantity of the underlying asset, with only whole contracts tradeable (fractional contracts not allowed).
Terms of futures contracts are non-negotiable.

Contract Specifications

Unit of measurement is specified in the contract.
Settlement terms are defined, with options for physical delivery of a given quantity of goods or cash settlement.
Quantity of goods to be delivered or covered under the contract is specified.
Currency in which the futures contract is quoted is defined.
Trade or quality considerations may be included, such as specific octane of gasoline or purity of metal, or certain conditions of the commodity.

Learn about the standardized futures contracts traded on exchanges, their rules and regulations, and the terms of trading. Understand the characteristics of futures contracts, including quantity and negotiability.