Futures contracts
were almost exclusively
traded on commodity prices in the
past, although innovations in
recent decades also have introduced
contracts on interest rates,
foreign exchange rates, price
indexes, and crop yields. A primary
use of futures involves shifting
risk from a firm that desires less
risk (the hedger) to a party who is
willing to accept the risk in exchange
for an expected profit (the
speculator). Also, hedgers with
opposite positions in the market
trade with each other, and speculators
with opposing views of the
market may also trade.