Like we’ve mentioned earlier on our blog, there are many types of contracts. And what ContractRoom does is work with all types and simplifies their structure digitally to make for faster, smarter negotiations. That’s why today we’ll talk about ‘future contracts’.
A future contract is type of legal agreement made for buying or selling a specific product at a fixed price in the near future. Depending on your needs, before choosing one of the many different types of contracts, we’ll mention a few:
- Individual stock futures: this is the simplest type of contract; these contracts are done between two investors and one of the parties agrees to pay a fixed price for a share of a stock to the other. At the end, said party must pay that fixed price on a specific date.
- Stock index futures: here, the price of the stock is tracked and speculated through an index. And even though the stock index can be traded as an asset, it can’t be sold to a buyer.
- Commodity futures: it’s an agreement made to buy commodities during a specific period of time. This contract is perfect if you want to avoid certain risks related to the ups and downs of a future price.
- Currency futures: these are transferable future contracts where the price at which currency can be sold at a specific time. They are legally binding and the price of the currency is set when the contract is signed.
- Interest Rate futures: these contracts have an underlying instrument – which can be from treasure bills to stocks – that pays interests. These contracts are made between a buyer and a seller agreeing for future interest-producing resources.