Submitted by robric18 t3_z6916m in explainlikeimfive
Gl0balCD t1_iy0dlge wrote
Futures. Futures are a forward contract (sign a contract today for a transaction at a future date) that are standardized for stock exchanges. You can watch the expected future price change based on current market movements. Futures reflect the expectations of traders, and thus the market as a whole.
Commodity companies will trade these contracts to hedge against price falls (basically locking in a price for the gas before they actually refine the oil).
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