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What is a futures contract?
A futures contract is an agreement to buy or sell an asset on a set future date at a price fixed today. Both sides are obligated, and most traders close the contract before that date rather than deliver, so it is mainly used to bet on or hedge against price moves.
What it means for you
Futures are traded on margin, so a small deposit controls a much larger position, and gains and losses are settled to your account every day. A move against you can bring a margin call or a forced close well before expiry. Some futures settle in cash rather than the asset, so you never receive the coin.
How it works
The CFTC defines a futures contract as an agreement to buy or sell for future delivery at a price set at the start, which obligates each party, is used to assume or shift price risk, and can be satisfied by delivery or offset. Offset means an equal and opposite trade in the same delivery month. Settlement is by physical delivery or in cash, where the short pays the long an amount based on a price or index. Exchanges mark positions to market each session, adding gains to and subtracting losses from account balances. Unlike an option, neither side can simply walk away.
An example
Say you buy one futures contract for 1 coin at $100, expiring in three months, and post $10 of margin. If the price rises to $110 the next day, $10 is added to your account; if it falls to $90, $10 is taken, and you may face a margin call.
Source: CFTC Glossary · checked 4 October 2026
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Educational content, not financial advice. Written by hand and checked against the source named above. Something wrong? Tell us and we reply within two business days.