What is an Assignable Contract?
An assignable contract allows a contract holder to assign his or her rights and obligations under the contract to a third party. The most common assignable contracts are futures contracts.
How Does an Assignable Contract Work?
Let's assume you own a futures contract to buy corn at a certain price in the future, and the value of the contract has increased by $10,000 since you bought it. Because futures contracts are often assignable, you can sell the contract to a third party today in return for cash, and the third party then assumes all the rights, responsibilities, and financial outcome of the contract from that point forward.
Not all futures contracts are assignable, especially those traded on exchanges.
Why Does an Assignable Contract Matter?
Assignable contracts provide a way for contract holders to lock in profits or cut losses without having to wait for the expiration date. If you are interested in buying or selling a contract, make sure to carefully check its terms and conditions to see if it is assignable or not.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
We've managed to avoid the great Mayan prediction of the end of the world in 2012, along with countless doomsday prognostications before it. But while we shrug off the continued calls that some...Read More →
When a company dumps an executive, it's definitely a sign that it's time to step back, look at the big picture, and try to get a feeling for whether the news is a positive or negative for the...Read More →
New college graduates may find themselves in a bind. They have significant student loans to pay off, but...Read More →
Several years ago, the federal government rolled out legislation meant to keep Americans from stashing their cash overseas. In 2010, the...Read More →