An option or forward contract that involves the sale or purchase of a currency or commodity at a given price on a specific future date, so as to a hedge against unfavorable exchange rate fluctuations. In other words, this hedging tool involves the purchase in the cash market of the difference between the value of an asset a trader (the short in a forward contract) is obligated to deliver in the future and the value of what he has at hand. For instance, if a trader has entered into a forward contract whereby agreeing to sell 200,000 ounces of copper in April, while he has only 80,000 ounces at hand (i.e. he is long that much), a forward cover would be required, where the trader enters, now, into an April-delivery long forward contract to the tune of 120,000 ounces.