Futures are a name given to a financial derivative referred to as a forward contract. By a futures contract the seller is obliged to provide a commodity or other asset to the buyer at an agreed-upon date. For commodities such as sugar, coffee, oil and wheat futures are widely traded, along with these commodities they are also traded for financial instruments such as stock market indexes, government bonds and foreign currencies.
Earliest known futures contract
Aristotle has recorded the earliest known futures contract in the story of Thales, an ancient Greek philosopher. Thales presumed that the upcoming olive harvest would be especially bountiful, so he entered into agreements with the owners of all the olive oil presses in the region. Months ahead of the harvest in exchange for a small deposit, Thales obtained the right to lease the presses at market prices during the harvest. As the time reaches, Thales was correct about the harvest, there was a boom in the demand for oil presses, and he made a great deal of money.
Futures Contract in 12th century
Futures contracts had become a staple of European trade fairs by the 12th century. Traveling with large quantities of goods was time-consuming and dangerous at that time. Instead of that Fair vendors traveled with display samples and larger quantities of futures were sold by them to be delivered at a later date.
