A future contract is a financial derivative that provides its holder the capability to hold a much larger position than his/her cash capital allows (leverage). The degree of leverage can vary depending on the underline asset from about 5 to 30 times the cash balance. For example someone with $10,000 can open a position which has a value of $100,000 if leverage in the certain asset is x10 or $150,000 if it is x15.

The clearing house of the transaction is holding a certain cash amount (margin) as a guarantee that the trader will fulfil his/her obligations to the counter party of the transaction.

Unlike options both the buyer and the short seller of a future contract have obligations which must be fulfilled if the contract is held until expiration.

A trader/investor can close his/her position anytime before the last trading date, without having to deliver or be delivered the physical asset and in that way he/she can achieve profit from the change in futures contracts prices.