What are 'Bond Futures'
Bond futures are contractual obligations for the contract holder to purchase or sell a bond on a specified date at a predetermined price. A bond future can be bought in a futures exchange market and the prices and dates are determined at the time the future is purchased.
BREAKING DOWN 'Bond Futures'
Bond contracts are standardized, and are overseen by a regulatory agency that ensures a certain level of equality and consistency. However, this form of derivative can be risky because it involves trading at a future date with only current information. The risk is potentially unlimited, for either the buyer or seller of the bond because the price of the underlying bond may change drastically between the exercise date and the initial agreement.
Read more: Bond Futures Definition | Investopedia http://www.investopedia.com/terms/b/bondfutures.asp#ixzz4D3FjmoQ4
Follow us: Investopedia on Facebook