# Futures Contracts ⎊ Area ⎊ Resource 5

---

## What is the Contract of Futures Contracts?

These standardized agreements obligate parties to transact an underlying digital asset at a predetermined price on a specified future date. For crypto markets, these are typically cash-settled, referencing an index price rather than physical delivery of the base currency. Proper management of the contract's expiration and settlement mechanism is crucial for risk control.

## What is the Obligation of Futures Contracts?

The core feature is the mandatory nature of the commitment, distinguishing it from options where only the buyer has an exercise right. This asymmetry in obligation creates clear directional exposure that traders use for hedging existing spot positions or taking leveraged directional bets. Understanding this commitment is vital for margin management.

## What is the Execution of Futures Contracts?

The process by which the contract is settled, either through physical exchange or cash settlement based on the reference price at expiration, must be transparent and reliable. In decentralized systems, this execution relies on oracles or on-chain mechanisms to determine the final price. Efficiency in this final step impacts realized returns.


---

## [Support Levels](https://term.greeks.live/definition/support-levels/)

## [Execution Certainty](https://term.greeks.live/definition/execution-certainty/)

## [Market Order](https://term.greeks.live/definition/market-order/)

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**Original URL:** https://term.greeks.live/area/futures-contracts/resource/5/