A legally binding, standardized agreement to buy or sell a standardized commodity, specifying quantity and quality at a set price on a future date. Some futures contracts, such as the CME Live Cattle and CME British Pound contracts, call for physical delivery of the commodity. Other futures contracts, such as the CME S&P 500 and CME Eurodollar contracts, are cash-settled and do not have a physical delivery provision. If these contracts are not liquidated by the Last Trading Day, the position is closed out by comparing the position’s price against a special Final Settlement Price, and debiting or crediting the position accordingly.
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