Futures contracts, also known as derivatives, are agreements between buyers and sellers to exchange a specific asset at a predetermined price and date in the future. The difference between the contract price and the current market price is known as the basis. When trading futures options, the buyer pays a premium to the seller for the right to purchase or sell the underlying asset at a specific price. It's important to note that the buyer pays the premium, while the seller receives it. Understanding these terms is crucial in navigating the world of finance and investing.
