Futures
An agreement to trade something later at a price agreed now. Older than shares, and the plumbing beneath much of modern finance.
A futures contract is a binding agreement to buy or sell a specified quantity of something, on a specified date, at a price fixed today.
Who they were built for
Producers and users of physical goods. A farmer who agrees a price for a harvest months away has removed price risk from the business, and so has the miller on the other side. Both sacrifice the chance of a favourable move to eliminate the risk of an unfavourable one.
Someone with a genuine exposure transfers it to someone willing to bear it. Everything else built on top — including the speculation — exists because that transfer needs a liquid market to happen in.
How they differ from options
An option is a right. A future is an obligation. The holder of a call may walk away; the holder of a futures contract may not. That single difference changes the risk profile entirely — losses on a future are not limited to a premium.
Margin and daily settlement
Gains and losses are credited and debited daily against a margin account. A position that moves against you generates a demand for more collateral that day, not at expiry. This is why a futures position can be closed out by a broker long before the contract's own end date.
The roll
Contracts expire. Anyone maintaining continuous exposure must sell the expiring one and buy a later-dated one, repeatedly. If the later contract is more expensive, that roll costs money every cycle — the effect described in commodities that can make a fund's return diverge badly from the spot price it tracks.
Leverage
Margin is a fraction of the contract's full value, so a small deposit controls a large exposure. That amplifies gains and losses identically, and it is why futures are a professional instrument rather than a beginner's one.