Hedging
Futures markets provide investors with the opportunity to hedge against price changes that may occur in the spot markets where the underlying asset is traded, by taking a reverse position.
High Liquidity
Since futures markets allow investing in the same amount of underlying assets with a lower investment than spot markets, they provide the opportunity to invest in a wider audience
Leverage Effect
Futures markets provide investors with the opportunity to take large positions and earn high profits with the help of leverage effect with a small amount of investment. The leverage effect also includes the risk of losing much faster and larger amounts for the investor compared to the spot market.
Portfolio Diversification
Futures markets offer portfolio managers different options in terms of portfolio diversification and therefore risk spread.
Benefiting from Price Drops
Futures markets allow investors to take advantage of price decreases by taking short positions.