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.
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
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. Imagine a cereal manufacturer that needs 5,000 bushels
A speculator with no interest in owning actual oil believes prices will rise due to geopolitical tension. What Are Futures? How Futures Contracts Work you post a