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What is a Commodity Futures Contract?

April 26, 2017commodity d-mat demat demat account demat services demat shares dematerialization dmat futures contract stocks

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What is a Commodity Futures Contract?

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A commodity futures contract is a contract for a commodity that will be delivered at sometime in the future. It is not contract for current delivery. For example if someone buys 125,000 Swiss francs for immediate delivery, he is not entering in to a contract for future delivery. If he buys a contract of Swiss francs for delivery in three months, he is purchasing a futures contract. The buyer may choose to sell the contract prior to delivery on the appropriate date. Similarly, the seller of the contract may purchase the contract prior to delivery (thus closing out his position), or may deliver on the delivery date.