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Suppose you are going to receive a unit of underlying asset (e.g. 10 ounces of Gold or Euro 100,000) in a year. The price of
Suppose you are going to receive a unit of underlying asset (e.g. 10 ounces of Gold or Euro 100,000) in a year. The price of the underlying asset is volatile, and you want to lock in the certain dollar amount now, regardless of the price in one year. What can you do now?
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Take a short position in a futures contract (i.e. sell a unit of the underlying asset at futures price).
Take a long position in a futures contract (i.e. buy a unit of the underlying asset at futures price).
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