In finance, a futures contract is a standardize agreement between 2 parties, to purchase or to sell a particular goods at a certain date in the future at a future price, which is established at the time when the contract is made.                 “Futures contracts (as well as options on futures contracts) are traded at 11 different commodity exchanges in the U.S. as well as abroad. Futures contracts on the major domestic agricultural crops are traded at the Chicago Board of Trade (CBOT), the Kansas City Board of Trade, the Minneapolis Grain Exchange, the New York Cotton Exchange and the Coffee, Sugar and Cocoa Exchange.” (United States Department of Agriculture; Risk management agency)                 The benefit of trading in the future market is that the investor can purchase the contract with a very small initial investment with a margin (good faith deposit that applies daily). The price of the commodity is established by the current market exchange at the time of the purchase or sell of the contract.                 It is very similar to option in finance. However, the difference is that a futures contract provides the purchaser the “obligation” to make or to take delivery under the terms of the contract, whereas an option grants the buyer the “right”, but not the obligation, to create a position previously held by the seller of the option. Both parties of a "futures contract" must fulfill the contract on the settlement date. Ergo, the risk to both parties is equally unlimited because they both have to fulfill the contract at a known price at a certain date. Therefore, I will say that to make a careful projection of the future is the key to making a futures contract.

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