If a futures contract is held until it expires, the buyer and seller are obligated to fulfill their respective obligations under the terms of the contract.

At the expiration date of the contract, the buyer must take delivery of the underlying asset, while the seller must deliver the asset at the agreed-upon price. If the buyer or seller fails to fulfill their obligations, they may be subject to penalties or legal action.

However, in many cases, futures contracts are not actually held until expiration. Instead, they are bought and sold on the futures market, with traders taking positions on the price movements of the underlying asset.

For example, a trader might buy a futures contract for crude oil with the intention of selling it at a higher price before it expires, rather than taking delivery of the oil. This allows traders to speculate on the price movements of the underlying asset without actually taking physical possession of it.

GET STARTED

100% stocks, 0% comission
Get exactly what you're paying for with comission-free stock investing.

Disclosure: Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees

In cases where a trader wants to hold a futures contract until it expires, they will need to make arrangements to take delivery of the underlying asset or settle the contract in cash before the expiration date. Cash settlement involves paying the difference between the contract price and the current market price of the underlying asset at the time of expiration, without taking delivery of the physical asset.