Futures mechanics
What is a Futures Contract and how does it legally differ from an option or equity share?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A futures contract is a standardized legal agreement to buy or sell an asset at a set price on a future date, traded on exchanges.
How it works
Unlike equity shares it confers no ownership, and unlike an option it obligates BOTH the buyer and the seller to perform at expiration; an option buyer merely holds a right to exercise, but the option seller (writer) is still obligated if exercised.
An example
An ES contract obligates delivery of S&P 500 index cash value at expiration.
Risk & limitations
Futures carry unlimited leveraged obligation risk for both sides of the trade, unlike an option buyer whose maximum loss is the premium paid.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.