FUT Full Form in Share Market

What is the Full Form of FUT in the Share Market?

The FUT’s full form in the share market is Futures. Futures are a category of stock market derivatives that could have equities and underlying assets. Futures are the contracts that must be paid for while entering a stock trading. Futures trading refers to futures, whose underlying assets are the securities in the stock market.

Types of Futures

If you enter a Futures contract, then you are obligated to buy or sell an asset at a specified price on or prior to a certain date. There are two types of futures, namely financial futures, which include currency, index, and interest rate futures, and physical futures, which include commodity futures, energy futures, metal futures, etc.

How Does Futures Trading Work?

Future contracts are available on four types of assets, namely stocks, indices, commodities and currency pairs. While trading futures, traders should buy a futures contract and agree to purchase shares in the index at a specific price set six months from now. If the indices go up, the value of the futures contract would increase. Then, they can sell the contract at a profit before its expiration rate. If traders believe that the equity price will fall and if the market declines as per their expectation, they can buy back the contract at a lower price, thus profiting from the difference.