Understanding Stock Market Futures: A Beginner's Guide
Futures contracts are used by investors to hedge their positions, speculate on price movements, and manage the risk associated with fluctuating prices.
They can be used to buy or sell a wide variety of financial instruments, including stocks, indexes, currencies, and commodities.
Futures contracts have expiration dates, and the price of the contract is determined by the underlying asset's price at the time of expiration.
If the price of the underlying asset is higher than the futures contract price at expiration, the buyer of the contract will profit, while the seller will incur a loss.
Conversely, if the price of the underlying asset is lower than the futures contract price at expiration, the buyer will incur a loss, while the seller will profit.
Stock market futures can be a useful tool for managing risk and making informed investment decisions, but they also carry some level of risk and may not be suitable for all investors.
It is important to understand the mechanics of futures contracts and the risks involved before using them in your investment strategy.