Outright Forward

An outright forward is a contract between two parties to exchange a certain amount of an asset at a predetermined price on a specific future date. The asset can be anything from stocks to commodities to currencies. The forward contract is a type of derivative, which means that its value is derived from the value of the underlying asset.

Outright forwards are often used to hedge against the risk of price changes. For example, a company that imports goods from another country may enter into an outright forward contract to lock in the price of the goods. This will protect the company from any potential increases in the price of the goods.

Outright forwards can also be used to speculate on the future price of an asset. For example, an investor may enter into an outright forward contract to buy a certain amount of a stock at a predetermined price. If the price of the stock rises above the predetermined price, the investor will make a profit.

Outright forwards are typically traded over-the-counter (OTC). This means that they are not traded on an exchange. Instead, they are negotiated directly between two parties.

Outright forwards are a complex financial instrument and should only be used by experienced investors.