Stock future, equity forward

A stock future or an equity forward is a future with a stock as the underlying instrument. An equity forward contract is an agreement between a buyer and a seller to make a share trade in the future at a predetermined share price.

Both the buyer and the seller of an equity forward is required to complete the deal. A stock future is a derivative instrument becuase it derives its value from an underlying stock. Stock futures give equity investors more opportunities to hedge their stock portfolios.