Forward Contract

A forward contract, colloquially known as a forward, is an agreement to buy or sell a commodity, security or financial instrument at a specified future date at a specified price. It is a completed contract and the commodity or financial asset will be delivered, unlike an option which offers a choice of whether or not to complete the trade. Unlike futures contracts forwards are not contracts with standard terms. They are tailor-made between the buyer and seller for each deal and are traded over the counter (OTC) and not on an exchange.