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KembaraXtra – Islamic Derivatives: Definition of a Futures Contract
🔹 Definition
A futures contract is a financial agreement between two parties to:
👉 Buy or sell a specific asset
👉 At a fixed price
👉 On a specified future date
🔹 Key Features
🔹 Simple Example
👉 After 1 month:
🔹 Definition
A futures contract is a financial agreement between two parties to:
👉 Buy or sell a specific asset
👉 At a fixed price
👉 On a specified future date
🔹 Key Features
- Binding obligation (both parties must perform)
- Fixed price agreed today
- Delivery or settlement happens in the future
- Usually involves margin deposits
🔹 Simple Example
- You agree today to buy palm oil at RM4,000 in 1 month
👉 After 1 month:
- If price = RM4,500 → you gain RM500 ✅
- If price = RM3,500 → you lose RM500 ❌
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