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Tagged: Cash settlement, Derivatives, Futures, Physical Settlement
What is Futures contract?
A Futures Contract is a contract between two parties where both parties agree to buy and sell a particular asset of specific quantity and at a predetermined price, at a specified date in future.
Future contract is where the deal will be made now and the settlement happens on the maturity date mentioned in the contract.
Through this contract, Buyer will get the “Rights to Buy” and Seller will get the “Rights to Sell” the stocks for the agreed price mentioned in the contract.
Future contract is a contract in which the deal is signed to be done on future date by both the parties and they will pay refundable margin to brokers.
On the future date ,the profit of one party will be paid by other through his refundable margin.
Future Contract – is one where a deal happens currently and settlement happens in a future date. Both seller and buyer signs the contract as the buyer gets the rights to buy and seller gets the right to sell. Both pay a margin to the exchange. The contract has an expiry date and proposed price. On the expiry date the settlement should be done even if one of the parties approach the exchange
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