A futures contract is a standardized agreement with specified future settlement terms linked to an underlying asset or reference. A long position gains from a favorable rise in the contract price; a short position gains from a favorable decline, before costs.
What the contract specifies
The specification defines the underlying, contract size, price increments, expiration and settlement method. Settlement may involve delivery or a cash payment based on a reference price. A crypto futures position therefore does not automatically mean cryptocurrency will arrive in a wallet.
Traders generally post margin rather than the full notional value. Position gains and losses affect their margin resources, and insufficient collateral can lead to liquidation.
Holding, closing and rolling
A trader can often close before expiration by executing an offsetting trade in the same contract. Holding until expiry follows that contract’s settlement rules. Maintaining exposure beyond expiry usually requires closing or settling the old contract and opening a later one, known as rolling.
Futures can support hedging or speculation. Their price may differ from spot, and fees, liquidity, margin changes and basis risk can materially alter the outcome.