An exchange-traded contract (and a derivative) whereby the holder is under obligation to buy or sell a specific asset (security or commodity) for a predetermined delivery price at a specified date in the future. Most of futures contracts don’t end up with delivery because most traders prefer to close out their positions before delivery dates. Closing out a futures position implies entering into an opposite futures position. However, the possibility of actual delivery is what relates the futures price to the spot price. Futures contracts, like forward contracts, are only promises to purchase or sell a commodity. The futures trader, regardless of his/ her intention as to the underlying commodity, is obligated to deliver or take delivery until the position is closed out by an offsetting position. Futures contracts are settled daily using margin accounts.