For example, if you are a seller and have a box of apples, I will ask you to buy them when they are ripe. After we have agreed verbally, we can also agree in writing. But there will be various risks when it comes to delivery. Maybe your harvest is not good, maybe there are too many apples, the price has dropped, and there will be various default risks.

Futures is a contract that standardizes various matters and margin ratios to control risks. We only need to buy and sell this contract. If you hold this contract all the time, then when the time comes, you have to exchange monetary items, that is, delivery, but generally we close the position before the contract expires and earn the price difference. . . It’s as simple as this.

If you still don’t understand, you can communicate.