Long Dated Forward

A futures contract deals with...well, the future. Like...going forward in time. Hence, one of these deals also gets called “a forward.”

A long-dated forward involves a futures contract expiring well down the road. Not quite in the time of warp drives and robot consciousness. But a long time in the future, relative to most forwards. Typically, we’re talking at least a year, but maybe as far as a decade.

It comes up a lot in currency markets, often as a hedge.

You're planning on doing a lot of business in the UK over the next few years. You're worried about how changes in the pound might impact your bottom line, especially as things get murky further out in time. So you set a long-dated forward, locking in a pound-to-dollar exchange rate of 1.3 five years from now.

Now, you can sleep easy (at least on the currency front), knowing you don't have to worry about the pound spiking in value and ruining your plans.