Futures and Options Markets

Futures and options markets are centralized marketplaces where participants trade standardized derivative contracts whose value is derived from an underlying asset, such as a commodity, stock, or currency. A futures contract is a binding agreement that obligates a party to buy or sell an asset at a predetermined price on a specific future date, while an options contract grants the holder the right, but not the obligation, to buy (a call option) or sell (a put option) an asset at a set price on or before its expiration. These markets serve crucial economic functions, primarily allowing businesses and producers to hedge against price risk and enabling investors and speculators to profit from anticipated price movements.