What do futures in finance refer to?

Futures in finance refer to contracts that obligate the buyer to purchase, and the seller to sell, a specific asset at a predetermined price at a specified future date. This concept is centered around the idea that markets are forward-looking and traders seek to profit from fluctuations in commodity prices over time.

By selecting estimates of future commodity values, the answer reflects the core understanding of futures. These contracts are rooted in projected market movements and are primarily used as a way to hedge risk or speculate on price changes. Traders make decisions based on their forecast of where commodity prices are headed, which is the essence of trading in futures.

Other options may present related concepts, but they do not capture the specific nature of futures contracts as effectively as focusing on estimates of future commodity values. For example, current market prices, historical pricing data, and options for purchasing stocks do not encompass the forward-looking aspect that defines futures trading.