Think: The contract IS the option. The investments you make in the futures market are actually contracts. You aren't buying an asset outright, like what happens in the stock market when you buy a share of some company. Instead, in futures trading, someone has given you the right to either buy or sell a set amount of some asset (shares of stock or barrels of oil or whatever) at a certain set price by a certain date.
An assignable contract allows you to transfer the contract to the third party (or to put it another way, you can assign it to someone else). This allows you to sell the contract to someone else if it becomes more valuable, rather than waiting to complete the transaction yourself. Not all futures contracts are assignable, however.
Assignable contracts are like making a bet on the Kentucky Derby, seeing your horse get out to a big lead, and then selling your betting slip to someone else while the race is still being run. You are eliminating the risk that your horse might trip and end up losing the race. You are also eliminating the hassle involved with cashing in the winning bet if the horse ends up winning.
Related or Semi-related Video
Finance: What is a Beneficiary?25 Views
Finance a la shmoop.. what is a beneficiary? well in Latin, bene is
good so this is like a good place to catch fish...well close not [Old man fishing in the ocean]
really but being a beneficiary is good it means you get stuff like if you are
the beneficiary of weird uncle Al's will then you get his odd collection of hair
balls shaped like US presidents and thirty two thousand two hundred sixty [Uncle Al's will appears]
$9.32... in essence then you are the beneficiary of his will you are the one
set up to benefit by the death of someone who wanted to favor you with
their assets when they had you know passed on to the great beyond where hair [Uncle Al with white wings in heaven]
balls will fall....
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