These contracts involve buying or selling an asset at a predetermined price on a future date.
Futures contracts are a commonly used tool in the financial world, particularly for hedging purposes. Hedging, in simple terms, refers to the act of reducing risk exposure. Therefore, investors who enter into futures contracts with the intention of minimizing potential losses caused by market volatility are known as hedgers. These contracts involve an agreement to buy or sell an asset at a predetermined price on a future date. By utilizing futures contracts, hedgers are able to protect their investments from unpredictable market fluctuations.
