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A futures contract is standardized forward contract. The forward contract is usually over-the-counter, a kind of transaction that needs the two parties to meet and agree on the details of the contract.
Futures trades at the exchange use standardized simple terms to understand, so one who buys or sells the contract knows exactly his or her side of the deal and its settlement can be with physical delivery or in cash.
Futures contracts trade almost on any underlying securities that are possible to trade.
Some active traded futures include:
• In the index sector, E-mini S&P 500 (ES)
• Mini Sized Dow Jones Industrial Average $5 (YM), E-mini NASDAQ 100 (NQ).
• In the commodities sector the most traded futures are gold (GC), crude oil (CL), wheat (ZW), corn (ZC).
• In the currency sector there are s such as EUR-USD (EUR), JPY-USD (JPY).
• In the interest rate and bonds EURODOLLAR LIBOR (GE), two-year US Treasury note (ZT), 10-Year US Treasury note (ZN).
General characteristics of the futures contract value are the expiration time (the delivery date), item delivery, its price at the exchange, plus its time value.
Futures are generally used as an investment, hedging, and an arbitrage instrument. Trading with this instrument you need only a margined capital; this means for buying one futures contract on crude oil (CL) priced at $50.00 a barrel representing 1,000 barrels equals $50,000. Generally the broker will ask you to have at least $10,000 in your account.
The following graph shows two lines: a gray and a black line. The gray line shows the actual commodity entering to a real-time price on the futures market exchange. The black line is the actual price on market plus its time value, the time of the delivery date.
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Simplified time value calculations components are the commodity price, risk-free interest rate (generally based on fed funds rate) and the delivery date.
• The risk-free rate is given as 4%
• Delivery dates: 166 days from today.
• Commodity market price is $50.00.
• Number of banking day’s convention is 360 days.
• In calendar year terms: 166/360 = 0.46
• Future’s value = 50X (1+ 4%) 0.46 = $50.91
The calculation came up with the time value of $910.00 for the next 166 days, means each day that nothing happens with the commodities market value, the future loses a portion of its time value.
The next graph shows the passage of time (the decay of the future value) and adds a change to the commodities price. The new position is 30 Days pass and the commodity's price rose to $51.00. According to the same calculations, the future's time value loses $160.00 and earnings (from the commodities revalued) of $1,000. Total calculation of P&L $1,000-$160.00 = $840.00 profit.
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Fundamentals 
