Forward contract

A Forward contract is an agreement between two parties to buy or sell an
asset (which can be of any kind) at a pre-agreed future point in time. One
party agrees to buy, the other to sell, for a forward price agreed in
advance.

In a forward transaction, no actual cash changes hands. If the transaction
is collaterised, exchange of margin will take place according to an
pre-agreed rule or schedule. Otherwise no asset of any kind actually changes
hands, until the maturity of the contract.

The forward price of such a contract is commonly contrasted with the spot
price, which is the price at which the asset changes hands(on the spot date,
usually next business day).

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