Futures
A contract agreed in advance to buy or sell on a set future day at a set price — used for directional bets or hedging on indices, commodities, and more.
In plain terms
Futures are "a contract agreed in advance to buy and sell on a set future day at a price set now." It began with farmers contracting before harvest to "sell rice at this price in autumn" to reduce price-change risk.
If an option is "a right you may or may not use," futures are "a promise (obligation) that must be fulfilled." So on the agreed day you must settle regardless of profit or loss.
What it tells you
Futures are used to bet on the future price of things like indices (S&P 500), crude oil, and gold, or to hedge price-change risk. Trading a large size on a small margin gives very high leverage.
The move of "index futures" is also used as a window to glimpse the market mood before the regular session opens. When the news says "futures opened lower," it is gauging the opening mood.
Formula
futures = a contract to buy or sell at a set price at a specific future time (unlike an option, not a "right" but an "obligation" that must be fulfilled)
What high or low means
Whether the futures price is above or below the current price lets you glimpse how the market views the future. But this is only expectation, not certainty.
The direction of index futures before the open is a reference for the day's mood, but it often changes once the session actually opens.
Futures carry large leverage, so even a small price change swings profit/loss greatly versus the margin. Losses can exceed the initial margin, making them, like options, a very risky tool for beginners.
"Futures rise = stocks rise today" is no guarantee. It is only the pre-open mood and can flip any time intraday.
Futures quotes and open-interest data are separate market data. This term is background for understanding market news.
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see Futures and other financial metrics alongside the sector average.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.