In index futures investing or trading, the buyer and seller lock purchase and sell bids. Both parties agree to close their holdings lawfully at a specific price and on a specific date. Traders' buy and sell orders are placed by a futures broker on their behalf. The next step is to create a long and short position for buy and sell orders, with initial and maintenance margins.
The payment of futures contracts is entirely based on cash. On the expiration date, the seller and buyer can also pay and receive the difference in the agreed-upon contract price in cash. Simply said, a higher price results in a profit for the buyer, while a lower price results in a loss for the seller.