Buy Futures Contract Example May 2026

If corn drops to $4.00, they are still obligated to pay the contract price of $5.00. While they lose money on the contract, they benefit from lower costs in the physical market, "locking in" their budget. Buying Example: The Individual Trader (Speculation)

Every contract specifies the exact quantity and quality of the asset (e.g., one crude oil contract covers 1,000 barrels). buy futures contract example

Profits and losses are calculated and settled in your account at the end of every trading day. If corn drops to $4

Imagine a cereal manufacturer that needs 5,000 bushels of corn in three months. They fear corn prices will rise, which would hurt their profit margins. Profits and losses are calculated and settled in

Buying a futures contract does not require paying the full value of the asset upfront. Instead, you post a , which is a small fraction (typically 3–12%) of the contract's total "notional" value.