If the price of a futures contract is fixed,then how come the price of the contract keeps on fluctuating daily

Question

Do people trade it.i.e. do they buy and sell the contract like in cash market once th IPO of the company is released, Whats the procedure? Plz help!!

Answer 1

The price you can by the stock or commodity is fixed.  For example you Buy oil at $140 a barrel on August contracts.  The price of the contract may trade for  $160 but if a barrel goes to $180 then the contract would trade for $200 or so.   Futures contracts have intrinsic value (how much you are actually in the money) and time value (how much time you have before contract expires). I will just explain that much!