# Not understanding futures price

I don't fully understand Futures & Forward pricing. I know that there is a delivery price and the actual future price. And that at the time of issuing, the future price is identical to the delivery price.

From my textbook, I have that the future price F_0 is given by

where S_0 is the spot price. So, at issuance, the delivery price would be F_0.

So, should I buy the contract, I would receive the underlying at expiry T having paid F_0.

Now let's suppose that time passes, and the future price has increased. I now decide to buy the contract at time t1 and we have that F_0 is different from F_t1.

When the contract expires, I simply receive the asset from the contract which I have payed F_t1. So, where does the delivery price come into play?

If it doesn't, wouldn't the correct definition of a future contract be 'a legal agreement to buy or sell a particular commodity asset, or security at a specified time in the future' instead of 'a legal agreement to buy or sell a particular commodity asset, or security at a predetermined price at a specified time in the future'

• Yes but let's suppose Gold's spot price is $100, gold's future price is$110 and the delivery price is $105. If I buy the contract today, I spend$110 and I will receive the asset. I won't have to pay an additional $105 to buy the asset. Where am I wrong? Oct 12, 2022 at 17:56 • You can't enter into a future for a price different than the futures price. If you "buy" a gold future, the delivery price will be$110. Even then, you won;t spend $110 today - you're just entering into a contract. You'll pay$110 when the contract expires (unless you sell it) Oct 12, 2022 at 18:41