What are Futures?

A future is like a promise that something will happen later, and you can bet on it today.

Imagine you have a lemonade stand. You know summer is coming, and you think the price of lemons will go up. You don’t want to pay more for them later. So, you make a deal with your friend: “If the price goes up, you’ll buy me lemons at the old price.” That’s like buying a future, it lets you lock in a price today for something that happens later.

A future is a special kind of agreement where people bet on what will happen to a certain thing (like prices, weather, or sports games) at a future date. It's like playing a game with your friends, everyone guesses how the price of lemons might change, and you can win or lose depending on who was right.

When you buy a future, you're saying, “I think this price will go up (or down), and I want to make sure I get a good deal later.” If you’re right, you win, like getting extra lemonade for your trouble! A future is like a promise that something will happen later, and you can bet on it today.

Imagine you have a lemonade stand. You know summer is coming, and you think the price of lemons will go up. You don’t want to pay more for them later. So, you make a deal with your friend: “If the price goes up, you’ll buy me lemons at the old price.” That’s like buying a future, it lets you lock in a price today for something that happens later.