Forward and Futures Contracts

In many commodities markets, it is very helpful for buyers or sellers to lock-in future prices. This is what both forwards and futures allow for. This tutorial explains how they work and what the difference is between the two.

• Forward Contract Introduction
• Futures Introduction
• Motivation for the Futures Exchange
• Futures Margin Mechanics
• Verifying Hedge with Futures Margin Mechanics
• Futures and Forward Curves
• Contango from Trader Perspective
• Severe Contango Generally Bearish
• Backwardation Bullish or Bearish
• Futures Curves II
• Contango
• Backwardation
• Contango and Backwardation Review
• Upper Bound on Forward Settlement Price
• Lower Bound on Forward Settlement Price
• Arbitraging Futures Contract
• Arbitraging Futures Contracts II
• Futures Fair Value in the Pre-Market
• Interpreting Futures Fair Value in the PreMarket

Source: Khan Academy